To prohibit the provision of Federal funds to the housing-related government-sponsored enterprises and to remove certain competitive advantages granted under law to such enterprises.

September 10, 2003

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

To prohibit the provision of Federal funds to the housing-related government-sponsored enterprises and to remove certain competitive advantages granted under law to such enterprises.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Free Housing Market Enhancement Act'.

SEC. 2. PROHIBITION OF FEDERAL FUNDS FOR HOUSING-RELATED GOVERNMENT-SPONSORED ENTERPRISES.

Notwithstanding any other provision of law, no Federal funds may be provided, directly or indirectly, to the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or any Federal Home Loan Bank.

SEC. 3. AMENDMENTS TO FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT.

(a) EXEMPTION FROM STATE TAXATION- Section 309(c) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(c)) is amended--

(1) by striking paragraph (2); and

(2) by striking `(1)'.

(b) AUTHORITY OF TREASURY TO APPROVE DEBT ISSUES- Section 304(b) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719(b)) is amended--

(1) by striking `, upon the approval of the Secretary of the Treasury,'; and

(2) by striking `with the approval of the Secretary of the Treasury'.

(c) AUTHORITY TO BORROW FROM TREASURY- Section 304 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719) is amended by striking subsection (c).

(d) DEPOSITARY AUTHORITY- Section 309(g) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(g)) is amended--

(1) by striking `each of the bodies corporate named in section 302(a)(2)' and inserting `the Association'; and

(2) by striking `such bodies corporate' and inserting `the bodies corporate named in section 302(a)(2)'.

(e) DESIGNATION OF OBLIGATIONS AS LAWFUL INVESTMENTS- The first sentence of section 311 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723c) is amended by striking `either of the bodies corporate named in section 302(a)(2)' and inserting `the Association'.

(f) APPOINTMENT OF MEMBERS OF BOARD OF DIRECTORS-

(1) IN GENERAL- Section 308(b) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723(b)) is amended--

(A) in the first sentence, by striking `five of whom shall be appointed annually by the President of the United States, and the remainder of whom' and inserting `who';

(B) in the second sentence, by striking `appointed by the President';

(C) in the third sentence--

(i) by striking `appointed or'; and

(ii) by striking `, except that any such appointed member may be removed from office by the President for good cause';

(D) in the fourth sentence, by striking `elective'; and

(E) by striking the fifth sentence.

(2) APPLICABILITY- The amendments made by paragraph (1) shall apply only with respect to the first election of members of the board of directors of the Federal National Mortgage Association occurring after the date of the enactment of this Act, and the board resulting from such election, and to elections and boards thereafter.

SEC. 4. AMENDMENTS TO FEDERAL HOME LOAN MORTGAGE CORPORATION ACT.

(a) EXEMPTION FROM STATE TAXATION- Section 303 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452) is amended by striking subsection (e).

(b) AUTHORITY OF TREASURY TO APPROVE DEBT ISSUES- Section 306(j) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(j)) is amended--

(1) by striking `(1)';

(2) by striking `be issued upon the approval of the Secretary of the Treasury and shall';

(3) by striking `with the approval of the Secretary of the Treasury'; and

(4) by striking paragraphs (2) and (3).

(c) AUTHORITY TO BORROW FROM TREASURY- Section 306 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455) is amended by striking subsection (c).

(d) DEPOSITARY AUTHORITY- Section 303(d) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(d)) is amended by striking the second and third sentences.

(e) DESIGNATION OF OBLIGATIONS AS LAWFUL INVESTMENTS- Section 303 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452) is amended by striking subsection (g).

(f) APPOINTMENT OF MEMBERS OF BOARD OF DIRECTORS-

(1) IN GENERAL- Section 303(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(a)(2)) is amended--

(A) in subparagraph (A)--

(i) in the first sentence, by striking `5 of whom shall be appointed annually by the President of the United States and the remainder of whom' and inserting `who'; and

(ii) in the second sentence, by striking `appointed by the President of the United States';

(B) in subparagraph (B)--

(i) by striking `such or'; and

(ii) by striking `, except that any appointed member may be removed from office by the President for good cause'; and

(C) in subparagraph (C)--

(i) by striking the first sentence; and

(ii) by striking `elective'.

(2) APPLICABILITY- The amendments made by paragraph (1) shall apply only with respect to the first election of members of the Board of Directors of the Federal Home Loan Mortgage Corporation occurring after the date of the enactment of this Act, and the Board resulting from such election, and to elections and Boards thereafter.

SEC. 5. AMENDMENTS TO FEDERAL HOME LOAN BANK ACT.

(a) EXEMPTION FROM STATE TAXATION-

(1) NOTES AND OBLIGATIONS- The first sentence of section 13 of the Federal Home Loan Bank Act (12 U.S.C. 1433) is amended by striking `, by any Territory,' and all that follows through `local taxing authority'.

(2) BANKS- The second sentence of section 13 of the Federal Home Loan Bank Act (12 U.S.C. 1433) is amended by striking `, by any Territory,' and all that follows through `taxed'.

(b) AUTHORITY TO BORROW FROM TREASURY- Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended by striking subsection (i).

(c) DEPOSITARY AUTHORITY- The Federal Home Loan Bank Act is amended--

(1) by striking section 14 (12 U.S.C. 1434); and

(2) in section 15 (12 U.S.C. 1435), by striking the second sentence.

(d) DESIGNATION OF OBLIGATIONS AS LAWFUL INVESTMENTS- Section 15 of the Federal Home Loan Bank Act (12 U.S.C. 1435), as amended by subsection (c)(2) of this section, is further amended by striking the first sentence.

SEC. 6. PROHIBITION OF FEDERAL RESERVE PURCHASE OF GSE DEBT.

Section 14(b)(2) of the Federal Reserve Act (12 U.S.C. 355(2)) is amended--

(1) by inserting `(A)' after `(2)'; and

(2) by adding at the end the following new subparagraph:

`(B) For purposes of this subsection, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Home Loan Banks shall not be considered agencies of the United States.'.

SEC. 7. REPEAL OF ELIGIBILITY OF GSE OBLIGATIONS FOR UNLIMITED INVESTMENTS.

(a) NATIONAL BANKS- Section 5136 of the Revised Statutes of the United States (12 U.S.C. 24) is amended in the sixth sentence of the paragraph designated `Seventh'--

(1) by striking `or the Federal Home Loan Banks';

(2) by striking `the Federal National Mortgage Association or'; and

(3) by striking `or mortgages, obligations, or other securities which are or ever have been sold by the Federal Home Loan Mortgage Corporation pursuant to section 305 or 306 of the Federal Home Loan Mortgage Corporation Act'.

(b) FEDERALLY CHARTERED THRIFTS- Section 5(c)(1) of the Home Owners' Loan Act (12 U.S.C. 1464(c)(1)) is amended--

(1) by striking subparagraphs (D) and (E);

(2) in subparagraph (F), by striking `the Federal National Mortgage Association,';

(3) in subparagraph (M), by striking `or a Federal home loan bank'; and

(4) by redesignating subparagraphs (F) through (U) as subparagraphs (D) through (S), respectively.

(c) CREDIT UNIONS- Section 107(7)(E) of the Federal Credit Union Act (12 U.S.C. 1757(7)(E)) is amended--

(1) by striking `Federal home loan banks, the Federal Home Loan Bank Board,';

(2) by striking `the Federal National Mortgage Association or'; and

(3) by striking `or in mortgages, obligations, or other securities which are or ever have been sold by the Federal Home Loan Mortgage Corporation pursuant to section 305 or section 306 of the Federal Home Loan Mortgage Corporation Act;'.

END