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<PRE>[DOCID: f:h1409ih.txt]






107th CONGRESS
  1st Session
                                H. R. 1409

    To reform the regulation of certain housing-related Government-
             sponsored enterprises, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 4, 2001

  Mr. Baker introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
    To reform the regulation of certain housing-related Government-
             sponsored enterprises, and for other purposes.

    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 ``Secondary Mortgage 
Market Enterprises Regulatory Improvement Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
      TITLE I--REFORM OF REGULATION OF FANNIE MAE AND FREDDIE MAC

                 Subtitle A--Improvement of Supervision

Sec. 101. Transfer of authority to regulate safety and soundness of 
                            enterprises to Board of Governors of 
                            Federal Reserve System.
Sec. 102. Duties and authorities of Board.
Sec. 103. Regulations.
Sec. 104. Assessments.
Sec. 105. Termination of general regulatory authority of HUD.
Sec. 106. Approval of Board for new activities.
Sec. 107. Limitation on nonmission-related assets.
Sec. 108. Conforming loan limits.
Sec. 109. Registration of securities.
Sec. 110. Treasury line of credit.
Sec. 111. Public disclosure of information.
Sec. 112. Risk-based capital test for enterprises.
Sec. 113. Minimum and critical capital levels.
Sec. 114. Definitions.
                  Subtitle B--Prompt Corrective Action

Sec. 131. Capital classifications.
Sec. 132. Supervisory actions applicable to undercapitalized 
                            enterprises.
Sec. 133. Supervisory actions applicable to significantly 
                            undercapitalized enterprises.
Sec. 134. Receivership.
                    Subtitle C--Enforcement Actions

Sec. 151. Cease-and-desist proceedings.
Sec. 152. Temporary cease-and-desist proceedings.
Sec. 153. Removal and prohibition authority.
Sec. 154. Enforcement and jurisdiction.
Sec. 155. Civil money penalties.
Sec. 156. Criminal penalty.
              Subtitle D--Reporting Regarding Enterprises

Sec. 161. Reporting regarding enterprises.
                     Subtitle E--General Provisions

Sec. 171. Conforming and technical amendments.
Sec. 172. Effective date.
        TITLE II--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY

Sec. 201. Abolishment of OFHEO.
Sec. 202. Continuation and coordination of certain regulations.
Sec. 203. Transfer and rights of employees of OFHEO.
Sec. 204. Transfer of property and facilities.

      TITLE I--REFORM OF REGULATION OF FANNIE MAE AND FREDDIE MAC

                 Subtitle A--Improvement of Supervision

SEC. 101. TRANSFER OF AUTHORITY TO REGULATE SAFETY AND SOUNDNESS OF 
              ENTERPRISES TO BOARD OF GOVERNORS OF FEDERAL RESERVE 
              SYSTEM.

    Part 1 of subtitle A of title XIII of the Housing and Community 
Development Act of 1992 is amended by striking sections 1311 and 1312 
(12 U.S.C. 4511, 4512) and inserting the following new section:

``SEC. 1311. SUPERVISION AND REGULATION BY FEDERAL RESERVE BOARD.

    ``(a) In General.--The enterprises shall, to the extent provided in 
this title, be subject to the supervision and regulation of the Board 
of Governors of the Federal Reserve System. The Board shall succeed to 
the authority of the Director of the Office of Federal Housing 
Enterprise Oversight of the Department of Housing and Urban Development 
and the general regulatory and any other authority of the Secretary of 
Housing and Urban Development with respect to the enterprises (except 
as specifically provided otherwise in this Act, the Federal National 
Mortgage Association Charter Act, the Federal Home Loan Mortgage 
Corporation Act, and any other provision of Federal law).
    ``(b) Delegation of Authority.--Pursuant to section 11(k) of the 
Federal Reserve Act, the Board of Governors of the Federal Reserve 
System may carry out any of its responsibilities for ongoing 
supervision and examination of the enterprises through one or more of 
the Federal Reserve banks. The Board may not delegate any rulemaking or 
policymaking responsibilities.
    ``(c) Savings Provision.--The authority of the Board to take 
actions under subtitles B and C does not in any way limit the general 
supervisory and regulatory authority granted to the Board under 
subsection (a).''.

SEC. 102. DUTIES AND AUTHORITIES OF BOARD.

    Section 1313 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4513) is amended to read as follows:

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

    ``(a) Duties.--
            ``(1) Principal duties.--The principal duties under this 
        title of the Board shall be to ensure that the enterprises--
                    ``(A) operate in a financially safe and sound 
                manner;
                    ``(B) carry out their missions only through 
                activities that are authorized under, and consistent 
                with the purposes of, the provisions of Federal law 
                that charter the enterprises; and
                    ``(C) remain adequately capitalized.
            ``(2) Other duties.--To the extent consistent with 
        paragraph (1), the duty of the Board shall be to exercise 
        general supervisory and regulatory authority over the 
        enterprises, in accordance with this title, the Federal 
        National Mortgage Association Charter Act, the Federal Home 
        Loan Mortgage Corporation Act, and any other provisions of law.
    ``(b) Delegation of Authority.--The Board may delegate to officers 
and employees of the Board any of the functions, powers, and duties of 
the Board, with respect to supervision and regulation of the 
enterprises, as the Board considers appropriate.''.

SEC. 103. REGULATIONS.

    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 Board shall issue any regulations and orders 
necessary to carry out the duties of the Board, with respect to 
supervision and regulation of the enterprises, under this title, the 
Federal National Mortgage Association Charter Act, and the Federal Home 
Loan Mortgage Corporation Act, and to ensure that the purposes of this 
title and such Acts are accomplished.''; and
            (2) in subsection (c), by striking ``Committee on Banking, 
        Finance and Urban Affairs'' and inserting ``Committee on 
        Financial Services''.

SEC. 104. 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 Board shall establish and collect 
from the enterprises annual assessments in an amount not exceeding the 
sum of--
            ``(1) the amount sufficient to provide for reasonable costs 
        and expenses of the Board, with respect to regulation and 
        supervision of the enterprises, including the expenses of any 
        examinations under section 1317; and
            ``(2) the amount sufficient to provide for reasonable costs 
        and expenses of the Department of Housing and Urban Development 
        in carrying out section 1325 and subparts B and C of this 
        subtitle.'';
            (2) in subsection (c), by adding at the end the following 
        new sentence: ``The Board may adjust the amounts of an
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y 
        semiannual assessments to be paid pursuant to subsection (b) by 
        the enterprises, as necessary in the discretion of the Board, 
        to ensure that the costs of enforcement activities under 
        subtitles B and C for an enterprise are borne only by that 
        enterprise.'';
            (3) by striking subsection (e) and inserting the following 
        new subsection:
    ``(e) Payment to HUD for Costs Relating to Housing Goals.--The 
Board shall, on a fiscal year basis, transfer from the Federal Housing 
Enterprises Oversight Fund established under subsection (f) to the 
Secretary of Housing and Urban Development an amount equal to the 
amount determined under subsection (a)(2) for such fiscal year.'';
            (4) in subsection (f), by striking the last sentence and 
        inserting the following new sentence: ``Notwithstanding any 
        other provision of law, any assessments collected pursuant to 
        this section and any amounts in the Fund shall not be construed 
        to be Government or public funds or appropriated money, shall 
        not be subject to apportionment for purposes of chapter 15 of 
        title 31, United States Code, or under any other authority, and 
        shall be available without fiscal year limitation for carrying 
        out the supervisory and regulatory responsibilities of the 
        Board with respect to the enterprises, including any necessary 
        administrative and nonadministrative expenses of the Board in 
        carrying out the purposes of this title, the Federal National 
        Mortgage Association Charter Act, and the Federal Home Loan 
        Mortgage Corporation Act, and for annual payments under 
        subsection (e).''; and
            (5) in subsection (g)--
                    (A) by striking paragraphs (1) and (2) and 
                inserting the following new paragraphs:
            ``(1) Financial operating plans and forecasts.--Before the 
        beginning of each fiscal year--
                    ``(A) the Board shall submit a copy of the 
                financial operating plans and forecasts for the Board, 
                with respect to regulation and supervision of the 
                enterprises, to the Director of the Office of 
                Management and Budget; and
                    ``(B) the Secretary of Housing and Urban 
                Development shall submit a copy of the financial 
                operating plans and forecasts for the Department of 
                Housing and Urban Development, with respect to 
                responsibilities and activities under section 1325 and 
                subtitles B and C of this title, to the Board.
            ``(2) Reports of operations.--As soon as practicable after 
        the end of each fiscal year and each quarter thereof--
                    ``(A) the Board shall submit a copy of the report 
                of the results of the operations of the Board, with 
                respect to regulation and supervision of the 
                enterprises, during such period to the Director of the 
                Office of Management and Budget; and
                    ``(B) the Secretary of Housing and Urban 
                Development shall submit a report of the results of the 
                operations of the Department of Housing and Urban 
                Development, with respect to responsibilities and 
                activities under section 1325 and subtitles B and C of 
                this title, to the Board.''; and
                    (B) in paragraph (3)--
                            (i) by striking ``(A)''; and
                            (ii) by striking ``, and (B)'' and 
                        inserting the following: ``. The annual plans, 
                        forecasts, and reports required under 
                        paragraphs (1)(B) and (2)(B) shall be 
                        included''.

SEC. 105. TERMINATION OF GENERAL REGULATORY AUTHORITY OF HUD.

    (a) In General.--Part 2 of subtitle A of title XIII of the Housing 
and Community Development Act of 1992 is amended--
            (1) by striking the heading for the part and the heading 
        for subpart A and inserting the following:

    ``PART 2--NEW ACTIVITIES, HOUSING INFORMATION, AND HOUSING GOALS

         ``Subpart A--New Activities and Housing Information'';

        and
            (2) by striking section 1321 (12 U.S.C. 4541).
    (b) Retention of Fair Housing Responsibilities.--Section 1325 of 
the Housing and Community Development Act of 1992 (12 U.S.C. 4545) is 
amended, in the matter preceding paragraph (1), by inserting ``of 
Housing and Urban Development'' after ``The Secretary''.
    (c) Retention of Authority to Establish and Enforce Housing 
Goals.--Part 2 of subtitle A of the Housing and Community Development 
Act of 1992 is amended--
            (1) by inserting ``of Housing and Urban Development (in 
        this subpart referred to as the `Secretary')'' after ``The 
        Secretary'', each place such term appears in--
                    (A) the first sentence of section 1331(a) (12 
                U.S.C. 4561(a)); and
                    (B) section 1341(a) (12 U.S.C. 4581(a));
            (2) in section 1332 (12 U.S.C. 4562), by striking 
        subsection (d);
            (3) in section 1333 (12 U.S.C. 4563), by striking 
        subsection (d);
            (4) in section 1334 (12 U.S.C. 4564), by striking 
        subsection (d);
            (5) in section 1336 (12 U.S.C. 4566)--
                    (A) in subsection (b)(3)(C), by inserting ``the 
                Board,'' after ``notice to the enterprise,''; and
                    (B) in subsection (c)(5), by inserting ``, and to 
                the Board,'' after ``housing plan'';
            (6) by striking sections 1337 and 1338 (12 U.S.C. 4567, 
        4562 note);
            (7) in section 1341(b)(1) (12 U.S.C. 4581(b)(1)), by 
        inserting after the period at the end the following new 
        sentence: ``Immediately upon issuing and serving a notice of 
        charges under this section, the Secretary shall submit a copy 
        of such notice to the Board.'';
            (8) in section 1345 (12 U.S.C. 4585)--
                    (A) in subsection (c)(1)(A), by inserting ``and the 
                Board'' after ``enterprise''; and
                    (B) in subsection (d), by inserting ``, upon 
                notification to the Board,'' after ``1343''; and
            (9) in section 1346(a) (12 U.S.C. 4586(a)), in the matter 
        preceding paragraph (1), by inserting ``and to the Board'' 
        after ``the public''.
    (d) Authority of Board Over Determinations by HUD.--Section 1331 of 
the Housing and Community Development Act of 1992 (12 U.S.C. 4561) is 
amended--
            (1) in the section heading by inserting ``and authority of 
        board'' before the period at the end; and
            (2) by adding at the end the following new subsection:
    ``(d) Authority of Board.--The Board may review any action of the 
Secretary of Housing and Urban Development made in carrying out the 
Secretary's responsibilities under this subtitle as the Board considers 
necessary to ensure that the enterprises comply with section 
1313(a)(1).''.

SEC. 106. APPROVAL OF BOARD FOR NEW ACTIVITIES.

    (a) In General.--Section 1322 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4542) is amended to read as follows:

``SEC. 1322. PRIOR APPROVAL AUTHORITY FOR NEW ACTIVITIES.

    ``(a) Authority.--The Board shall have the authority to approve all 
new activities, and to review all ongoing activities, of an enterprise 
to ensure compliance with the Federal National Mortgage Association 
Charter Act or the Federal Home Loan Mortgage Corporation Act, as 
applicable.
    ``(b) Requirement for Prior Approval.--An enterprise may not 
commence any new activity before obtaining the approval of the Board 
for the new activity, in accordance with this section.
    ``(c) Standard for Approval.--The Board may approve a new activity 
of an enterprise only if--
    
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        ``(1) the new activity is authorized--
                    ``(A) with respect to the Federal National Mortgage 
                Association, under the Federal National Mortgage 
                Association Charter Act or other Federal law; and
                    ``(B) with respect to the Federal Home Loan 
                Mortgage Corporation, under the Federal Home Loan 
                Mortgage Corporation Act or other Federal law;
            ``(2) the Board determines that the enterprise can conduct 
        the new activity in a safe and sound manner; and
            ``(3) the Board determines that the new activity is in the 
        public interest.
    ``(d) Procedure for Approval.--The Board shall, by regulation, 
establish procedures for the enterprises to obtain the approval of the 
Board for purposes of subsection (b).''.
    (b) Definition of New Activity.--Paragraph (13) of section 1303 of 
the Housing and Community Development Act of 1992 (12 U.S.C. 4502(13)) 
is amended to read as follows:
            ``(13) New activity.--The term `new activity' means, with 
        respect to the enterprises, any program, activity, business 
        process, or investment that directly or indirectly provides 
        financing or other services related to conventional mortgages 
        (including purchasing, servicing, selling, and lending on the 
        security of such mortgages) that--
                    ``(A) is significantly different from programs, 
                activities, business processes, or investments that (i) 
                have been approved under this Act, or (ii) were 
                approved or engaged in by an enterprise before the date 
                of the enactment of the Housing and Community 
                Development Act of 1992; or
                    ``(B) represents an expansion, in terms of the 
                dollar volume or number of mortgages or securities 
                involved, of programs above limits expressly contained 
                in any prior approval.''.
    (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 ``program'' and inserting 
                ``activity''; and
                    (B) by striking ``Secretary'' and inserting ``Board 
                of Governors of the Federal Reserve System''.
            (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 ``program'' and inserting 
                ``activity''; and
                    (B) by striking ``Secretary'' and inserting ``Board 
                of Governors of the Federal Reserve System''.
            (3) 1992 act.--Section 1369C(a)(4) of the Housing and 
        Community Development Act of 1992 (12 U.S.C. 4622(a)(4)) is 
        amended by striking ``programs'' and inserting ``activities''.

SEC. 107. LIMITATION ON NONMISSION-RELATED ASSETS.

    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 Enterprises, Special 
   Enforcement Powers, and Limitation on Nonmission-Related Assets'';

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

``SEC. 1369E. LIMITATION ON NONMISSION-RELATED ASSETS.

    ``(a) In General.--The Board shall, by regulation, limit the 
nonmission-related assets that an enterprise may hold at any time. The 
Board shall define the term `nonmission-related asset' for purposes of 
this section.
    ``(b) Rule of Construction.--Subsection (a) may not be construed to 
authorize an enterprise to engage in any new activity (as such term is 
defined in section 1303) relating to any nonmission-related asset 
without obtaining the prior approval of the Board in accordance with 
section 1322.''.

SEC. 108. CONFORMING LOAN LIMITS.

    (a) Fannie Mae.--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 $275,000 for a mortgage secured by 
a single-family residence, $351,950 for a mortgage secured by a 2-
family residence, $425,400 for a mortgage secured by a 3-family 
residence, and $528,700 for a mortgage secured by a 4-family residence, 
except that such maximum limitations shall be adjusted effective 
January 1 of each year beginning with 2002, subject to the limitations 
in this paragraph. Each adjustment shall be made by adding to each such 
amount (as it may have been previously adjusted) a percentage thereof 
equal to the percentage increase during the 12-month period ending with 
the previous October in the housing price index maintained by the Board 
of Governors of the Federal Reserve System (pursuant to section 1321 of 
the Housing and Community Development Act of 1992 (12 U.S.C. 4541)). 
If, upon the conclusion of such 12-month period, the level of the 
housing price index does not exceed the highest level attained by such 
index upon the conclusion of the previous such 12-month periods, no 
such adjustment may be made for the January 1 first occurring 
thereafter.''.
    (b) Freddie Mac.--Section 305(a)(2) of the Federal National 
Mortgage Association Charter 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 $275,000 for a mortgage 
secured by a single-family residence, $351,950 for a mortgage secured 
by a 2-family residence, $425,400 for a mortgage secured by a 3-family 
residence, and $528,700 for a mortgage secured by a 4-family residence, 
except that such maximum limitations shall be adjusted effective 
January 1 of each year beginning with 2002, subject to the limitations 
in this paragraph. Each adjustment shall be made by adding to each such 
amount (as it may have been previously adjusted) a percentage thereof 
equal to the percentage increase during the 12-month period ending with 
the previous October in the housing price index maintained by the Board 
of Governors of the Federal Reserve System (pursuant to section 1321 of 
the Housing and Community Development Act of 1992 (12 U.S.C. 4541)). 
If, upon the conclusion of such 12-month period, the level of the 
housing price index does not exceed the highest level attained by such 
index upon the conclusion of the previous such 12-month periods, no 
such adjustment may be made for the January 1 first occurring 
thereafter.''.
    (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 before section 1322 (12 U.S.C. 4542) the following new 
section:

``SEC. 1321. HOUSING PRICE INDEX.

    ``The Board 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 (as such term is defined 
in section 1303 of Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992). In establishing such method, the Board shall 
take into consideration the monthly survey of all major lenders 
conducted by the Federal Housing Finance Board 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 of the 
Secondary Mortgage Market Enterprises Regulatory Improvement Act, any 
appropriate house price indexes of the Bureau of the Census of the 
Department of Commerce, and any other indexes or measures that the 
Board considers appropriate.''.

SEC. 109. REGISTRATION OF SECURITIES.

    (a) Fannie Mae.--
            (1) Mortga
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ge-backed securities.--Section 304(d) of the 
        Federal National Mortgage Association Charter Act (12 U.S.C. 
        1719(d)) is amended by striking the fourth sentence and 
        inserting the following new sentence: ``Securities issued by 
        the corporation under this subsection shall not be exempt 
        securities within the meaning of the laws administered by the 
        Securities and Exchange Commission, but such securities shall 
        not be subject to fees under section 6(b) of the Securities Act 
        of 1933 or under section 13(e) or 14(g) of the Securities 
        Exchange Act of 1934.''.
            (2) Subordinate obligations.--Section 304(e) of the Federal 
        National Mortgage Association Charter Act (12 U.S.C. 1719(e)) 
        is amended by striking the fourth sentence and inserting the 
        following new sentence: ``Securities issued by the corporation 
        under this subsection shall not be exempt securities within the 
meaning of the laws administered by the Securities and Exchange 
Commission, but such securities shall not be subject to fees under 
section 6(b) of the Securities Act of 1933 or under section 13(e) or 
14(g) of the Securities Exchange Act of 1934.''.
            (3) Securities.--Section 311 of the Federal National 
        Mortgage Association Charter Act (12 U.S.C. 1723c) is amended--
                    (A) in the second sentence, by inserting ``by the 
                Association'' after ``issued''; and
                    (B) by adding at the end the following new 
                sentence: ``Any stock, obligations, securities, 
                participations, or other instruments issued by the 
                corporation pursuant to this title shall not be exempt 
                securities within the meaning of the laws administered 
                by the Securities and Exchange Commission, but such 
                stock, obligations, securities, participations, or 
                other instruments shall not be subject to fees under 
                section 6(b) of the Securities Act of 1933 or under 
                section 13(e) or 14(g) of the Securities Exchange Act 
                of 1934.''.
    (b) Freddie Mac.--Subsection (g) of section 306 of the Federal Home 
Loan Mortgage Corporation Act (12 U.S.C. 1455(g)) is amended to read as 
follows:
    ``(g) Any securities issued or guaranteed by the Corporation shall 
not be exempt securities within the meaning of the laws administered by 
the Securities and Exchange Commission, but such securities shall not 
be subject to fees under section 6(b) of the Securities Act of 1933 or 
under section 13(e) or 14(g) of the Securities Exchange Act of 1934.''.

SEC. 110. TREASURY LINE OF CREDIT.

    (a) Fannie Mae.--The first sentence of section 304(c) of the 
Federal National Mortgage Association Charter Act (12 U.S.C. 1719(c)) 
is amended by striking ``The'' and inserting ``Upon a request by the 
Board of Governors of the Federal Reserve System, the''.
    (b) Freddie Mac.--The first sentence of paragraph (1) of section 
306(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
1455(c)(1)) is amended by striking ``The'' and inserting ``Upon a 
request by the Board of Governors of the Federal Reserve System, the''.

SEC. 111. PUBLIC DISCLOSURE OF INFORMATION.

    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 ``by enterprises'' 
        and inserting ``and information''; and
            (2) by adding at the end the following new subsection:
    ``(c) Public Disclosure of Information.--The Board shall, by 
regulation, require each enterprise to disclose to the public, on not 
less than an annual basis, such financial, business, and other 
information that the Board determines would be in the public 
interest.''.

SEC. 112. RISK-BASED CAPITAL TEST FOR ENTERPRISES.

    Section 1361 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4611) is amended--
            (1) in subsection (a)(2)(A), by inserting ``or change in 
        such other manner as the Board considers appropriate,'' after 
        ``subparagraph (C),'';
            (2) in subsection (b)(1), by inserting after the period at 
        the end the following: ``Notwithstanding subsection (a), the 
        Board may, in the sole discretion of the Board, make any 
        assumptions that the Board considers appropriate regarding 
        interest rates, home prices, and new business.''; and
            (3) in subsection (c)(2), by inserting ``or such other 
        percentage as the Board considers appropriate'' before the 
        period at the end.

SEC. 113. 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) by striking subsection (b);
            (2) by striking ``(a) In General.--''; and
            (3) in the matter preceding paragraph (1), by inserting 
        before ``the sum of'' the following: ``the amount established 
        by the Board, by regulation or order, as such amount may be 
        adjusted from time-to-time by the Board to achieve the purposes 
        of this title, that is not less than''.
    (b) Critical Capital Level.--Section 1363 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4613) is amended, in the 
matter preceding paragraph (1), by inserting before ``the sum of'' the 
following: ``the amount established by the Board, by regulation or 
order, as such amount may be adjusted from time-to-time by the Board to 
achieve the purposes of this title, that is not less than''.

SEC. 114. DEFINITIONS.

    Section 1303 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4502) is amended--
            (1) in paragraphs (8), (9), (10), and (19), by inserting 
        ``of Housing and Urban Development'' after ``Secretary'' each 
        place such term appears;
            (2) by striking paragraphs (5), (14), and (15);
            (3) by redesignating paragraphs (7) through (13) (as 
        amended by the preceding provisions of this Act) as paragraphs 
        (8) through (14), respectively;
            (4) by redesignating paragraphs (16) through (19) as 
        paragraphs (15) through (18), respectively;
            (5) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Enterprise-affiliated party.--The term `enterprise-
        affiliated party' means--
                    ``(A) any director, officer, employee, or 
                controlling stockholder of, or agent for, an 
                enterprise;
                    ``(B) any shareholder, consultant, joint venture 
                partner, and any other person as determined by the 
                Board (by regulation or case-by-case) who participates 
                in the conduct of the affairs of an enterprise; and
                    ``(C) any independent contractor (including any 
                attorney, appraiser, or accountant) who knowingly or 
                recklessly participates in--
                            ``(i) any violation of any law or 
                        regulation;
                            ``(ii) any breach of fiduciary duty; or
                            ``(iii) any unsafe or unsound practice,
                which caused or is likely to cause more than a minimal 
                financial loss to, or a significant adverse effect on, 
                the enterprise.'';
            (6) by redesignating paragraphs (2), (3), (4) as paragraphs 
        (3), (4), and (5), respectively; and
            (7) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) Board.--The term `Board' means the Board of Governors 
        of the Federal Reserve System.''.

                  Subtitle B--Prompt Corrective Action

SEC. 131. CAPITAL CLASSIFICATIONS.

    Section 1364 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4614) is amended--
            (1) by striking subsec
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tion (b) and inserting the following 
        new subsection:
    ``(b) Discretionary Classification.--
            ``(1) Grounds for reclassification.--The Board may 
        reclassify an enterprise under paragraph (2) if--
                    ``(A) at any time, the Board determines in writing 
                that an enterprise is engaging in conduct not approved 
                by the Board that could result in a rapid depletion of 
                core capital or 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 Board determines that an enterprise is in an unsafe 
                or unsound condition; or
                    ``(C) pursuant to section 1371(b), the Board deems 
                an enterprise 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 
        an enterprise for any reason not specified in this subsection, 
        if the Board takes any action described in paragraph (1) the 
        Board may classify an enterprise--
                    ``(A) as undercapitalized, if the enterprise is 
                otherwise classified as adequately capitalized;
                    ``(B) as significantly undercapitalized, if the 
                enterprise is otherwise classified as undercapitalized; 
                and
                    ``(C) as critically undercapitalized, if the 
                enterprise is otherwise classified as significantly 
                undercapitalized.'';
            (2) by redesignating subsection (d) as subsection (e); and
            (3) by inserting after subsection (c) the following new 
        subsection:
    ``(d) Restriction on Capital Distributions.--
            ``(1) In general.--An enterprise shall make no capital 
        distribution if, after making the distribution, the enterprise 
        would be undercapitalized.
            ``(2) Exception.--Notwithstanding paragraph (1), the Board 
        may permit an enterprise 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 enterprise in 
                at least an equivalent amount; and
                    ``(B) will reduce the financial obligations of the 
                enterprise or otherwise improve the financial condition 
                of the enterprise.''.

SEC. 132. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED 
              ENTERPRISES.

    (a) Effective Date for Supervisory Actions.--Section 1365(c) of the 
Housing and Community Development Act of 1992 (12 U.S.C. 4615(c)) is 
amended by striking ``1-year'' and inserting ``6-month''.
    (b) Supervisory Actions.--Section 1365 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4615) is amended--
            (1) 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 Board shall--
                    ``(A) closely monitor the condition of any 
                undercapitalized enterprise;
                    ``(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 
                enterprise 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.--An undercapitalized 
        enterprise shall not permit its average total assets during any 
        calendar quarter to exceed its average total assets during the 
        preceding calendar quarter unless--
                    ``(A) the Board has accepted the enterprise's 
                capital restoration plan;
                    ``(B) any increase in total assets is consistent 
                with the plan; and
                    ``(C) the enterprise's ratio of tangible equity to 
                assets increases during the calendar quarter at a rate 
                sufficient to enable the enterprise to become 
                adequately capitalized within a reasonable time.
            ``(5) Prior approval of acquisitions and issuance of new 
        products.--An undercapitalized enterprise shall not, directly 
        or indirectly, acquire any interest in any entity or issue a 
        new product unless--
                    ``(A) the Board has accepted the enterprise's 
                capital restoration plan, the enterprise is 
                implementing the plan, and the Board determines that 
                the proposed action is consistent with and will further 
                the achievement of the plan; or
                    ``(B) the Board determines that the proposed action 
                will further the purpose of this section.''; and
            (2) in the subsection heading for subsection (b), by 
        striking ``From Undercapitalized to Significantly 
        Undercapitalized'';
            (3) by redesignating subsection (c) (as amended by 
        subsection (a) of this section) as subsection (d); and
            (4) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Other Discretionary Safeguards.--The Board may take, with 
respect to an undercapitalized enterprise, any of the actions 
authorized to be taken under section 1366 with respect to a 
significantly undercapitalized enterprise, if the Board determines that 
such actions are necessary to carry out the purpose of this 
subtitle.''.

SEC. 133. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY 
              UNDERCAPITALIZED ENTERPRISES.

    Section 1366 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4616) is amended--
            (1) 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, 
                1 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 enterprise.
                    ``(B) Dismissal of directors or executive 
                officers.--Require the enterprise to dismiss from 
                office any director or executive officer who had held 
                office for more than 180 days immediately before the 
                enterprise became undercapitalized. Dismissal under 
                this subparagraph shall not be construed to be a 
                removal pursuant to the Board's enforcement powers 
                provided in section 1377.
                    ``(C) Employ qualified executive officers.--Require 
                the enterprise to employ qualified executive officers 
                (who, if the B
2000
oard so specifies, shall be subject to 
                approval by the Board).''; and
                    (E) by inserting at the end the following new 
                paragraph:
            ``(8) Other action.--Require the enterprise to take any 
        other action that the Board determines will better carry out 
        the purpose of this section than any of the actions specified 
        in this paragraph.'';
            (2) by redesignating subsection (c) as subsection (d); and
            (3) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Restriction on Compensation of Executive officers.--An 
enterprise that is classified as significantly undercapitalized may 
not, without prior written approval by the Board--
                    ``(A) pay any bonus to any executive officer; or
                    ``(B) 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 enterprise became 
                undercapitalized.''.

SEC. 134. RECEIVERSHIP.

    Section 1368 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4618) is amended to read as follows:

``SEC. 1368. APPOINTMENT OF RECEIVERS

    ``(a) Appointment.--
            ``(1) Authority.--Upon a determination that an enterprise 
        is critically undercapitalized and a determination that the 
        enterprise meets such other conditions for taking action 
        pursuant to this subsection as the Board shall by regulation 
        establish, the Board may, notwithstanding section 1367(a)(1), 
        appoint a receiver for the enterprise in accordance with this 
        section and in lieu of appointment of a conservator pursuant to 
        section 1367. If the Board takes action pursuant to this 
        subsection, the Board shall appoint the receiver not later than 
        30 days after providing notice under paragraph (2) of this 
        subsection.
            ``(2) Notice.--Upon making a determination under paragraph 
        (1) to appoint a receiver for an enterprise, the Board shall 
        provide written notice to the enterprise, the Committee on 
        Financial Services of the House of Representatives, and the 
        Committee on Banking, Housing, and Urban Affairs of the 
        Senate--
                    ``(A) that a receiver will be appointed for the 
                enterprise;
                    ``(B) stating the reasons for the appointment of 
                the receiver; and
                    ``(C) identifying the person or governmental agency 
                that the Board intends to appoint as a receiver.
            ``(3) Qualifications.--The receiver shall be--
                    ``(A) the Board or any other governmental agency; 
                or
                    ``(B) any person that--
                            ``(i) has no claim against, or financial 
                        interest in, the enterprise or other basis for 
                        a conflict of interest; and
                            ``(ii) has the financial and management 
                        expertise necessary to carry out the duties 
                        under subsection (c).
    ``(b) Judicial Review.--The provisions of section 1369(b) shall 
apply to the appointment of a receiver pursuant to this section to the 
same extent that such provisions apply to the appointment of a 
conservator pursuant to this subtitle.
    ``(c) Duties.--A receiver appointed pursuant to this section shall 
be appointed for the purpose, and shall have the duty, of liquidating 
or winding up the affairs of the enterprise, in accordance with such 
regulations as the Board may issue.
    ``(d) Replacement, Powers, Liability Protection.--The provisions of 
subsections (c) and (d) of section 1369, section 1369A, and section 
1369B shall apply to a receiver appointed pursuant to this section to 
the same extent that such provisions apply to a conservator appointed 
pursuant to this subtitle. In addition to any powers under section 
1369A, a receiver appointed pursuant to this section shall have such 
powers with respect to an enterprise, as the Board may by regulation 
provide, that the Federal Deposit Insurance Corporation has under 
section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) with 
respect to a insured depository institution when acting as a receiver 
under such section.''.

                    Subtitle C--Enforcement Actions

SEC. 151. 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 Board, an enterprise or any 
enterprise-affiliated party is engaging or has engaged, or the Board 
has reasonable cause to believe that the enterprise or any enterprise-
affiliated party is about to engage, in an unsafe or unsound practice 
in conducting the business of the enterprise or is violating or has 
violated, or the Board has reasonable cause to believe that the 
enterprise or any enterprise-affiliated party is about to violate, a 
law, rule, or regulation, or any condition imposed in writing by the 
Board in connection with the granting of any application or other 
request by the enterprise or any written agreement entered into with 
the Board, the Board may issue and serve upon the enterprise or such 
party a notice of charges in respect thereof. The Board may not 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)), or with 
subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage 
Corporation Act (12 U.S.C. 1456(e), (f)).
    ``(b) Issuance for Unsatisfactory Rating.--If an enterprise 
receives, in its most recent report of examination, a less-than-
satisfactory rating for asset quality, management, earnings, or 
liquidity, the Board may (if the deficiency is not corrected) deem the 
enterprise to be engaging in an unsafe or unsound practice for purposes 
of this subsection.''; and
            (2) in subsection (c)(2), by striking ``or director'' and 
        inserting ``director, or enterprise-affiliated party''.

SEC. 152. 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 Board determines that the 
violation or threatened violation or the unsafe or unsound practice or 
practices specified in the notice of charges served upon the enterprise 
or any enterprise-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 enterprise, or is likely to 
weaken the condition of the enterprise prior to the completion of the 
proceedings conducted pursuant to sections 1371 and 1373, the Board may 
issue a temporary order requiring the enterprise 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 subsection 1371(d).'';
            (2) in subsection (b), by striking ``or director'' and 
        inserting ``director, or enterprise-affiliated party'';
            (3) in subsection (d), striking ``or director'' and 
        inserting ``director, or enterprise-affiliated party''; and
            (4)
2000
 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 Board 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 
enterprise 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. 153. 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 through 1379B (12 U.S.C. 
        4637-41) as sections 1379 through 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 Board determines 
that--
            ``(1) any enterprise-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 Board in connection with the grant of any 
                        application or other request by such 
                        enterprise; or
                            ``(iv) any written agreement between such 
                        enterprise and the Board;
                    ``(B) engaged or participated in any unsafe or 
                unsound practice in connection with any enterprise; 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 enterprise 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 
                enterprise,
the Board may serve upon such party a written notice of the Board's 
intention to remove such party from office or to prohibit any further 
participation by such party, in any manner, in the conduct of the 
affairs of any enterprise.
    ``(b) Suspension Order.--
            ``(1) Suspension or prohibition authority.--If the Board 
        serves written notice under subsection (a) to any enterprise-
        affiliated party of the Board's intention to issue an order 
        under such subsection, the Board may suspend such party from 
        office or prohibit such party from further participation in any 
        manner in the conduct of the affairs of the enterprise, if the 
        Board--
                    ``(A) determines that such action is necessary for 
                the protection of the enterprise; and
                    ``(B) serves such party with written notice of the 
                suspension order.
            ``(2) Effective period.--Any suspension order issued under 
        subsection (a)--
                    ``(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 Board 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 Board to such party under 
                        subsection (a).
            ``(3) Copy of order.--If the Board issues a suspension 
        order under subsection (a) to any enterprise-affiliated party, 
        the Board shall serve a copy of such order on any enterprise 
        with which such party is affiliated at the time such order is 
        issued.
    ``(c) Notice, Hearing, and Order.--A notice of intention to remove 
an enterprise-affiliated party from office or to prohibit such party 
from participating in the conduct of the affairs of an enterprise 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 Board 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 Board shall find that any of the grounds 
specified in such notice have been established, the Board may issue 
such orders of suspension or removal from office, or prohibition from 
participation in the conduct of the affairs of the enterprise, as it 
may deem appropriate. Any such order shall become effective at the 
expiration of 30 days after service upon such enterprise 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 Board 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 enterprise;
            ``(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 enterprise;
            ``(3) violate any voting agreement previously approved by 
        the Board; or
            ``(4) vote for a director, or serve or act as an 
        enterprise-affiliated party.
    ``(e) Industry-Wide Prohibition.--
            ``(1) In general.--Except as provided in subparagraph (2), 
        any person who, pursuant to an order issued under subsection 
        (h), has been removed or suspended from office in an enterprise 
or prohibited from participating in the conduct of the affairs of an 
enterprise 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 enterprise.
            ``(2) Exception if board provides written consent.--If, on 
        or after the date an order is issued under this section which 
        removes or suspends from office any enterprise-affiliated party 
        or prohibits such party from participating in the conduct of 
        the affairs of an enterprise, such party receives the written 
        consent of the Board, the order shall, to the extent of such 
        consent, cease to apply to such party with respect to the 
        enterprise described in the written consent. If the Board 
2000

        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 Board specifically finds that it should 
apply to a corporation, firm, or other business enterprise.
    ``(g) Stay of Suspension and Prohibition of Enterprise-Affiliated 
Party.--Within 10 days after any enterprise-affiliated party has been 
suspended from office and/or prohibited from participation in the 
conduct of the affairs of an enterprise 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 enterprise is located, for a stay of 
such suspension and/or prohibition 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 Enterprise-Affiliated Party Charged 
With Felony.--
            ``(1) Suspension or prohibition.--
                    ``(A) In general.--Whenever any enterprise-
                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 
                Board may, if continued service or participation by 
                such party may pose a threat to the enterprise or 
                impair public confidence in the enterprise, by written 
                notice served upon such party, suspend such party from 
                office or prohibit such party from further 
                participation in any manner in the conduct of the 
                affairs of any enterprise.
                    ``(B) Provisions applicable to notice.--
                            ``(i) Copy.--A copy of any notice under 
                        paragraph (1)(A) shall also be served upon the 
                        enterprise.
                            ``(ii) Effective period.--A suspension or 
                        prohibition under subparagraph (A) shall remain 
                        in effect until the information, indictment, or 
                        complaint referred to in such subparagraph is 
                        finally disposed of or until terminated by the 
                        Board.
            ``(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 an enterprise-
                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 Board may, 
                if continued service or participation by such party may 
                pose a threat to the enterprise or impair public 
                confidence in the enterprise, issue and serve upon such 
                party an order removing such party from office or 
                prohibiting such party from further participation in 
                any manner in the conduct of the affairs of the 
                enterprise without the prior written consent of the 
                Board.
                    ``(B) Provisions applicable to order.--
                            ``(i) Copy.--A copy of any order under 
                        paragraph (2)(A) shall also be served upon the 
                        enterprise, whereupon the enterprise-affiliated 
                        party who is subject to the order (if a 
                        director or an officer) shall cease to be a 
                        director or officer of such enterprise.
                            ``(ii) Effect of acquittal.--A finding of 
                        not guilty or other disposition of the charge 
                        shall not preclude the Board from instituting 
                        proceedings after such finding or disposition 
                        to remove such party from office or to prohibit 
                        further participation in enterprise affairs 
                        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 Board.
            ``(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 an enterprise 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 an enterprise are suspended pursuant to 
        this section, the Board 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 
enterprise 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 enterprise-affiliated party concerned may 
        request in writing an opportunity to appear before the Board to 
        show that the continued service to or participation in the 
        conduct of the affairs of the enterprise by such party does 
        not, or is not likely to, pose a threat to the interests of the 
        enterprise or threaten to impair public confidence in the 
        enterprise. Upon receipt of any such request, the Board 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 Board designated 
        employees of the Board to submit written materials (or, at the 
        discretion of the Board, oral testimony) and oral argument. 
        Within 60 days of such hearing, the Board shall notify such 
        party whether the suspension or prohibition from participation 
        in any manner in the conduct of the affairs of the enterprise 
        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 enterprise will be 
        rescinded or otherwise modified. Such notification shall 
        contain a statement of the basis for the Board's decision, if 
        adverse to such party. The Board is authorized to prescribe 
        such rules as may be necessary to effectuate the purposes of 
        this subsection.
    ``(i) Hearings and Judicial Review.--
            ``(1) Venue a
2000
nd 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 
        enterprise 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 Board 
        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 Board may at 
        any time, upon such notice and in such manner as it shall deem 
        proper, modify, terminate, or set aside any such order. Upon 
        such filing of the record, the Board may modify, terminate, or 
        set aside any such order with permission of the court.
            ``(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 enterprise or the enterprise-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 enterprise is 
        located, within 30 days after the date of service of such 
        order, a written petition praying that the order of the Board 
        be modified, terminated, or set aside. A copy of such petition 
        shall be forthwith transmitted by the clerk of the court to the 
        Board, and thereupon the Board 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 Board. 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 Board.''.
    (b) Conforming Amendment.--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''.

SEC. 154. 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 Board may in its discretion 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 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. 155. 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), in the matter preceding paragraph 
        (1), by striking ``or any executive officer or'' and inserting 
        ``any executive officer of an enterprise, any enterprise-
        affiliated party, or any'';
            (2) by striking subsection (b) and inserting the following 
        new subsection:
    ``(b) Amount of Penalty.--
            ``(1) First tier.--Any enterprise which, or any enterprise-
        affiliated party who--
                    ``(A) violates any provision of this title, the 
                Federal National Mortgage Association Charter Act (12 
                U.S.C. 1716 et seq.), the Federal Home Loan Mortgage 
                Corporation Act (12 U.S.C. 1451 et seq.), or any order, 
                condition, rule, or regulation under any such title or 
                Act, except that the Board may not 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)), or 
                with subsection (e) or (f) of section 307 of the 
                Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
                1456(e), (f));
                    ``(B) violates any final or temporary order or 
                notice issued pursuant to this title;
                    ``(C) violates any condition imposed in writing by 
                the Board in connection with the grant of any 
                application or other request by such enterprise;
                    ``(D) violates any written agreement between the 
                enterprise and the Board; or
                    ``(E) engages in any conduct the Board determines 
                to be an unsafe or unsound practice,
        shall forfeit and pay a civil penalty of not more than $5,000 
        for each day during which such violation continues.
            ``(2) Second tier.--Notwithstanding paragraph (1)--
                    ``(A) if an enterprise, or an enterprise-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 enterprise; or
                            ``(iii) breaches any fiduciary duty which 
                        violation, practice, or breach; 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 enterprise; or
                            ``(iii) results in pecuniary gain or other 
                        benefit to such party,
        the enterprise or enterprise-affiliated party shall forfeit and 
        pay a civil penalty of not more than $25,000 for each day 
        during which such violation, practice, or breach continues.
            ``(3) Third tier.--Notwithstanding paragraphs (1) and (2), 
        any enterprise which, or any enterprise-affiliated party who--
                    ``(A) knowingly--
                            ``(i) commits any violation described in 
               
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         any subparagraph of paragraph (1);
                            ``(ii) engages in any unsafe or unsound 
                        practice in conducting the affairs of such 
                        enterprise; or
                            ``(iii) breaches any fiduciary duty; and
                    ``(B) knowingly or recklessly causes a substantial 
                loss to such enterprise 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 an 
                enterprise, an amount not to exceed $1,000,000; and
                    ``(B) in the case of any enterprise, $1,000,000.''; 
                and
            (3) in subsection (d)--
                    (A) by striking ``or director'' each place such 
                term appears and inserting ``director, or enterprise-
                affiliated party'';
                    (B) by striking ``request the Attorney General of 
                the United States to'';
                    (C) by inserting ``, or the United States district 
                court within the jurisdiction of which the headquarters 
                of the enterprise is located,'' after ``District of 
                Columbia''; and
                    (D) by striking ``, or may, under the direction and 
                control of the Attorney General, bring such an 
                action''.

SEC. 156. 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 Board, 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 enterprise shall, notwithstanding 
section 3571 of title 18, be fined not more than $1,000,000, imprisoned 
for not more than 5 years, or both.''.

              Subtitle D--Reporting Regarding Enterprises

SEC. 161. REPORTING REGARDING ENTERPRISES.

    Part 3 of subtitle A of the Housing and Community Development Act 
of 1992 is amended--
            (1) by striking sections 1351, 1352, and 1353 (Public Law 
        102-550; 106 Stat. 3969), except the provisions of law amended 
        by such sections repealed shall not be affected by such repeal; 
        and
            (2) by striking sections 1354, 1355, and 1356 (12 U.S.C. 
        4601-3) and inserting the following new section:

``SEC. 1351. REPORTS REGARDING ENTERPRISE ISSUES AND ACTIVITIES.

    ``(a) Insured Depository Institution Holdings of Enterprise Debt 
and Mortgage-Backed Securities.--Not later than 180 days after the date 
of the enactment of the Secondary Mortgage Market Enterprises 
Regulatory Improvement Act, the Secretary of the Treasury shall submit 
a report to the Congress regarding--
            ``(1) the extent to which obligations issued or guaranteed 
        by the enterprises (including mortgage-backed securities) are 
        held by federally insured depository institutions, including 
        such extent by type of institution and such extent relative to 
        the institutions' capital;
            ``(2) the extent to which the unlimited holdings by 
        federally insured depository institutions of the obligations of 
        the enterprises could produce systemic risk issues, 
        particularly for the safety and soundness of the banking system 
        in the United States, in the event of default or failure by an 
        enterprise; and
            ``(3) the effects on the enterprises, the banking industry, 
        and mortgage markets, if prudent limits on the holdings of 
        enterprise obligations were placed on federally insured 
        depository institutions.
    ``(b) Portfolio Operations, Risk Management, and Mission.--Not 
later than one year after the date of the enactment of the Secondary 
Mortgage Market Enterprises Regulatory Improvement Act, the Board shall 
submit a report to the Congress--
            ``(1) describing the holdings of the enterprises in 
        retained mortgages and repurchased mortgage-backed securities 
        and the use of derivatives for hedging purposes;
            ``(2) describing the extent of such holdings relative to 
        other assets and the risk implications of such holdings;
            ``(3) containing an analysis of such holdings for safety 
        and soundness and/or mission compliance purposes; and
            ``(4) containing an assessment of whether such holdings and 
        other assets of the enterprises fulfill the mission purposes of 
        the enterprises under the Federal National Mortgage Association 
        Charter Act and the Federal Home Loan Mortgage Corporation Act.
The Board shall consult with the Comptroller General of the United 
States in preparing the report under this subsection and in conducting 
any research, analyses, and assessments for the report.
    ``(c) Debt Issuances.--Not later than 270 days after the date of 
the enactment of the Secondary Mortgage Market Enterprises Regulatory 
Improvement Act, the Secretary of the Treasury shall submit a report to 
the Congress regarding--
            ``(1) the extent of outstanding obligations of the 
        enterprises and the rate of growth of such obligations; and
            ``(2) an analysis of whether debt issuances should be 
        limited or reduced if an enterprise is not operating in a safe 
        and sound manner and/or not complying with its mission, or if 
        an enterprise fails to maintain a certain credit rating and/or 
        debt rating.
    ``(d) Treasury Line of Credit.--Not later than one year after the 
date of the enactment of the Secondary Mortgage Market Enterprises 
Regulatory Improvement Act, the Secretary of the Treasury shall submit 
a report to the Congress regarding the purposes of the authority of the 
Secretary of the Treasury to purchase the debt obligations of the 
enterprises. The report shall assess the desirability of limiting such 
authority in certain circumstances or eliminating such authority.
    ``(e) Voluntary Agreement.--The Board shall submit a report to the 
Congress annually, on fiscal year basis, regarding the progress in 
implementing the commitments announced by the enterprises on October 
19, 2000, regarding capitalization, disclosure, and market discipline, 
namely--
            ``(1) to issue subordinated debt;
            ``(2) to obtain and disclose an annual credit rating;
            ``(3) to disclose interest rate risk;
            ``(4) to disclose credit risk;
            ``(5) to maintain greater liquidity; and
            ``(6) to perform and disclose an interim risk-based capital 
        stress test.
The report shall determine whether the intended purposes of this 
agreement, particularly to reduce systemic risk, have been achieved, 
whether changes should be made to the agreement, and whether any action 
should be taken to ensure compliance with the agreement by the 
enterprises. Each report under this subsection for a fiscal year shall 
be submitted not later than the December 31 first occurring after the 
conclusion of such fiscal year.
    ``(f) Recommendations.--Each report submitted pursuant to this 
section shall include specific recomm
2000
endations of appropriate policies, 
limitations, regulations, legislation, or other actions to deal 
appropriately and effectively with the issues addressed by such 
report.''.

                     Subtitle E--General Provisions

SEC. 171. CONFORMING AND TECHNICAL AMENDMENTS.

    (a) Amendments to 1992 Act.--Title XIII of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4501 et seq.), as amended 
by the preceding provisions of this Act, is further amended--
            (1) 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'';
                            (ii) by striking ``The'' and inserting 
                        ``Subject to title II of the Secondary Mortgage 
                        Market Enterprises Regulatory Improvement Act, 
                        the''; and
                            (iii) by striking ``Director and the 
                        Office. Officers'' and inserting ``Board, with 
                        respect to regulation and supervision of the 
                        enterprises. Such officers'';
                    (B) in subsection (b)--
                            (i) by striking ``the Board of Governors of 
                        the Federal Reserve System,'' and
                            (ii) by inserting ``, and with compensation 
                        of other officers and employees of the Board of 
Governors of the Federal Reserve System'' before the period at the end;
                    (C) in subsection (c), by inserting ``, with 
                respect to regulation and supervision of the 
                enterprises'' before the first comma;
                    (D) in subsection (d), by striking ``Office'' and 
                inserting ``Secretary pursuant to subpart B of part 2 
                of this subtitle, subsections (m) and (n) of section 
                309 of the Federal National Mortgage Association 
                Charter Act, and subsections (e) and (f) of section 307 
                of the Federal Home Loan Mortgage Corporation Act;
                    (E) in subsection (e), by inserting ``, with 
                respect to regulation and supervision of the 
                enterprises'' before the period at the end; and
                    (F) by striking subsection (f);
            (2) in section 1317(c) (12 U.S.C. 4517(c)), by striking 
        ``the Board of Governors of the Federal Reserve System,'';
            (3) in section 1319A (12 U.S.C. 4520)--
                    (A) by striking ``(a) In General.--''; and
                    (B) by striking subsection (b);
            (4) in section 1319C (12 U.S.C. 4522)--
                    (A) in subsection (a)(1), by inserting ``under this 
                title'' after ``redressed''; and
                    (B) in subsection (b), by inserting ``under this 
                title'' after ``issued'';
            (5) in section 1319D (12 U.S.C. 4523), by inserting ``to 
        conduct duties relating to the regulation and supervision of 
        the enterprises'' before the second comma;
            (6) in section 1319E (12 U.S.C. 4524)--
                    (A) by inserting ``relating to regulation and 
                supervision of the enterprises'' before ``in accordance 
                with''; and
                    (B) by inserting ``in functions relating to the 
                regulation and supervision of the enterprises'' before 
                ``shall be made available'';
            (7) in section 1319F (12 U.S.C. 4525), by striking ``Code'' 
        and all that follows through ``agencies'' and inserting ``Code, 
        the Board, to the extent only of its functions, activities, and 
        employees involved in the regulation and supervision of the 
        enterprises, shall be considered an agency'';
            (8) in the section heading for section 1328, by striking 
        ``secretary'' and inserting ``board of governors'';
            (9) in section 1361 (12 U.S.C. 4611)--
                    (A) in subsection (e)--
                            (i) in paragraph (1), by striking the first 
                        sentence and inserting the following new 
                        sentence: ``The Board shall establish the risk-
                        based capital test under this section by 
                        regulation.''; and
                            (ii) in paragraph (2), by striking 
                        ``individual other than the Director to apply 
                        the test in the same manner as the Director'' 
                        and inserting ``individual (who is not a member 
                        of the Board) to apply the test in the same 
                        manner as the Board''; and
                    (B) in subsection (f), by striking ``the Secretary, 
                the Board of Governors of the Federal Reserve System''; 
                and
            (10) in section 1364(c) (12 U.S.C. 4614(c)), by striking 
        the last sentence;
            (11) in section 1367(a)(2) (12 U.S.C. 4617(a)(2)), by 
        striking ``with the written concurrence of the Secretary of the 
        Treasury,'';
            (12) in section 1369A (12 U.S.C. 4620)--
                    (A) in the subsection heading for subsection (c) by 
                striking ``Director'' and inserting ``Board''; and
                    (B) in subsection (i), by inserting ``having duties 
                relating to regulation and supervision of the 
                enterprises'' before the period at the end;
            (13) in the section heading for section 1369D (12 U.S.C. 
        4623), by striking ``director'' and inserting ``board'';
            (14) in the subsection heading for subsection (e) of 
        section 1376 (12 U.S.C. 4636(e)), by striking ``Director'' and 
        inserting ``Board'';
            (15) by striking section 1383;
            (16) by striking ``Director'' each place such term appears 
        (except the second place such term appears in each of 
        paragraphs (1) and (2) of section 1316(g), the third place such 
        term appears in section 1317(c), in section 1361(a)(3)(C), and 
        the second and third places such term appears in subsection (f) 
        of section 1361) and inserting ``Board'';
            (17) by striking ``Director's'' each place such term 
        appears and inserting ``Board's'';
            (18) by striking ``Office'' each place such term appears 
        (except each place such term appears in section 1315(b), in 
        section 1316(g)(1), the second place such term appears in 
        section 1316(g)(2), in section 1317(c), in section 1334(d)(3), 
        in section 1361(a)(3)(C), and each place such term appears in 
        section 1361(f)) and inserting ``Board'';
            (19) by striking ``Committee on Banking, Finance and Urban 
        Affairs'' and inserting ``Committee on Financial Services'' 
        each place such term appears in sections 1319B, 1319G(c), 
        1328(a), 1336(b)(3)(C), 1337, and 1369(a)(3); and
            (20) by striking ``Secretary'' and inserting ``Board'' each 
        place such term appears in --
                    (A) part 1 of subtitle A;
                    (B) subpart A of part 2 of subtitle A (except in 
                sections 1324 and 1325);
                    (C) subtitle B (except in section 1361(d)(1)); and
                    (D) subtitle C.
    (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 
        ``Board of Governors of the Federal Reserve System'', in--
                    (A) section 303(c)(2) (12 U.S.C. 1718(c)(2));
                    (B) section 309(d
2000
)(3)(B) (12 U.S.C. 
                1723a(d)(3)(B)); and
                    (C) section 309(k)(1);
            (2) in section 309 (12 U.S.C. 1723a)--
                    (A) in the second sentence of subsection (d)(3)(B), 
                by striking ``Director'' each place such term appears 
                and inserting ``Board of Governors'';
                    (B) in subsection (k)--
                            (i) in paragraph (1), by striking 
                        ``Director shall'' and inserting ``Board of 
                        Governors shall''; and
                            (ii) in paragraphs (2) and (3), by striking 
                        ``Director'' each place such term appears and 
                        inserting ``Board of Governors of the Federal 
                        Reserve System''; and
                    (C) in subsection (l)(2), by striking ``Director'' 
                and inserting ``Board of Governors of the Federal 
                Reserve System''; and
            (3) in section 309(n)--
                    (A) in paragraph (1), by inserting ``the Board of 
                Governors of the Federal Reserve System,'' after 
                ``House of Representatives,''; and
                    (B) in paragraph (3)(B), by striking ``Secretary'' 
                and inserting ``Board of Governors of the Federal 
                Reserve System''.
    (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 
        ``Board of Governors of the Federal Reserve System'', 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 the second sentence of section 303(h)(2) (12 U.S.C. 
        1452(h)(2)), by striking ``Director'' each place such term 
        appears and inserting ``Board of Governors'';
            (3) in section 306(i) (12 U.S.C. 1455(i))--
                    (A) by striking ``section 1316(c)'' and inserting 
                ``section 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 (c)(1), by striking ``Director 
                shall'' and inserting ``Board of Governors shall'';
                    (B) in subsection (c), in paragraphs (2) and (3), 
                by striking ``Director'' each place such term appears 
                and inserting ``Board of Governors of the Federal 
                Reserve System'';
                    (C) in subsection (d)(2), by striking ``Director'' 
                and inserting ``Board of Governors of the Federal 
                Reserve System''; and
                    (D) in subsection (f)--
                            (i) in paragraph (1), by inserting ``the 
                        Board of Governors of the Federal Reserve 
                        System,'' after ``House of Representatives,'';
                            (ii) in paragraph (3)(B), by striking 
                        ``Secretary'' and inserting ``Board of 
                        Governors of the Federal Reserve System''.
    (d) Amendment to 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 ``Board of 
Governors of the Federal Reserve System in its capacity under title 
XIII of the Housing and Community Development Act of 1992''.
    (e) Amendments to 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--
            (1) by striking ``Director of the Office of Federal Housing 
        Enterprise Oversight of the Department of Housing and Urban 
        Development'' and inserting ``Board of Governors of the Federal 
        Reserve System''; and
            (2) by striking ``Director of such Office'' and inserting 
        ``Board''.
    (f) Amendment to 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).
    (g) Amendments to Title 5, United States Code.--
            (1) Executive schedule pay rate.--Section 5315 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.
            (2) Definition of agency.--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 Board of 
        Governors of the Federal Reserve System, to the extent of the 
        duties of such Board relating to regulation and supervision of 
        the Federal National Mortgage Association and the Federal Home 
        Loan Mortgage Corporation''.

SEC. 172. 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--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY

SEC. 201. 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 203; 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 203.
    (d) Use of Property and Services.--
            (1) Property.--The Chairman of the Board of Governors of 
        the Federal Reserve System may use the property of the Office 
        of Federal Housing Enterprise Oversight to perform functions 
        which have been transferred to the Board of Governors of the 
        Federal Reserve System 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 
        transfer
1d46
red to the Board of Governors of the Federal Reserve 
        System 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 shall abate by reason of the 
        enactment of this Act, except that the Board of Governors of 
        the Federal Reserve System shall be substituted for the 
        Director as a party to any such action or proceeding.

SEC. 202. 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;
                    (B) the Secretary of Housing and Urban Development 
                and that relate to the Secretary's authority under--
                            (i) title XIII of the Housing and Community 
                        Development Act of 1992;
                            (ii) under the Federal National Mortgage 
                        Association Charter Act, with respect to the 
                        Federal National Mortgage Association; or
                            (iii) the Federal Home Loan Mortgage 
                        Corporation Act; or
                    (C) a court of competent jurisdiction and that 
                relate to functions transferred by this Act; and
            (2) are in effect on the date of the abolishment under 
        section 201(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 Board of Governors of the Federal Reserve System until 
modified, terminated, set aside, or superseded in accordance with 
applicable law by such Board, any court of competent jurisdiction, or 
operation of law.

SEC. 203. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO.

    (a) Transfer.--Each employee of the Office of Federal Housing 
Enterprise Oversight shall be transferred to the Board of Governors of 
the Federal Reserve System for employment no later than the date of the 
abolishment under section 201(a) of this Act and such transfer shall be 
deemed a transfer of function for the purpose 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 18 
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 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 Board of Governors of the 
        Federal Reserve System 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, 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 Board of Governors of the Federal 
Reserve System determines, after the end of the 1-year period beginning 
on the date the transfer of functions to the Board is completed, that a 
reorganization of the combined work force is required, that 
reorganization shall be deemed a major reorganization for purposes of 
affording affected employees retirement under section 8336(d)(2) or 
8414(b)(1)(B) of title 5, United States Code.
    (e) Employee Benefit Programs.--Any employee accepting employment 
with the Board of Governors of the Federal Reserve System as a result 
of such transfer may retain for 18 months after the date such transfer 
occurs membership in any employee benefit program of the Board of 
Governors of the Federal Reserve System 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 Board of 
        Governors of the Federal Reserve System.
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 Board of Governors of the Federal Reserve System. If any 
employee elects to give up membership in a health insurance program or 
the health insurance program is not continued by such Board, 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.
    (f) Senior Executive Service Employees.--A transferring employee in 
the Senior Executive Service shall be placed in a comparable position 
at the agency or entity to which such employee is transferred.
    (g) Notice of Positions.--Transferring employees shall receive 
notice of their position assignments not later than 120 days after the 
effective date of their transfer.

SEC. 204. TRANSFER OF PROPERTY AND FACILITIES.

    Upon the abolishment under section 201(a), all property of the 
Office of Federal Housing Enterprise Oversight shall transfer to the 
Board of Governors of the Federal Reserve System.
                                 &lt;all&gt;

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