HR 1461 - Federal Housing Finance Reform Act of 2005

10-26-05, Bill Passed House 331-90
Referred to Senate

109th CONGRESS
1st Session

H. R. 1461

IN THE SENATE OF THE UNITED STATES

October 31, 2005

Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs

AN ACT

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 `Federal Housing Finance Reform Act of 2005'.

(b) Table of Contents- The table of contents for this Act is as follows:

Sec. 1. Short title and table of contents.

Sec. 2. Definitions.

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

Subtitle A--Improvement of Safety and Soundness

Sec. 101. Establishment of the Federal Housing Finance Agency.

Sec. 102. Duties and authorities of Director.

Sec. 103. Housing Finance Oversight Board.

Sec. 104. Authority to require reports by regulated entities.

Sec. 105. Disclosure of charitable contributions by enterprises.

Sec. 106. Assessments.

Sec. 107. Examiners and accountants.

Sec. 108. Prohibition and withholding of executive compensation.

Sec. 109. Reviews of regulated entities.

Sec. 110. Regulations and orders.

Sec. 111. Risk-based capital requirements.

Sec. 112. Minimum and critical capital levels.

Sec. 113. Review of and authority over enterprise assets and liabilities.

Sec. 114. Corporate governance of enterprises.

Sec. 115. Required registration under Securities Exchange Act of 1934.

Sec. 116. Financial Institutions Examination Council.

Sec. 117. Guarantee fee study.

Sec. 118. Conforming amendments.

Subtitle B--Improvement of Mission Supervision

Sec. 121. Transfer of program and activities approval and housing goal oversight.

Sec. 122. Review by Director of new programs and activities of enterprises.

Sec. 123. Conforming loan limits.

Sec. 124. Annual housing report regarding regulated entities.

Sec. 125. Revision of housing goals.

Sec. 126. Duty to serve underserved markets.

Sec. 127. Monitoring and enforcing compliance with housing goals.

Sec. 128. Affordable housing fund.

Sec. 129. Consistency with mission.

Sec. 130. Enforcement.

Sec. 131. Conforming amendments.

Subtitle C--Prompt Corrective Action

Sec. 141. Capital classifications.

Sec. 142. Supervisory actions applicable to undercapitalized regulated entities.

Sec. 143. Supervisory actions applicable to significantly undercapitalized regulated entities.

Sec. 144. Authority over critically undercapitalized regulated entities.

Sec. 145. Conforming amendments.

Subtitle D--Enforcement Actions

Sec. 161. Cease-and-desist proceedings.

Sec. 162. Temporary cease-and-desist proceedings.

Sec. 163. Prejudgment attachment.

Sec. 164. Enforcement and jurisdiction.

Sec. 165. Civil money penalties.

Sec. 166. Removal and prohibition authority.

Sec. 167. Criminal penalty.

Sec. 168. Subpoena authority.

Sec. 169. Conforming amendments.

Subtitle E--General Provisions

Sec. 181. Boards of enterprises.

Sec. 182. Report on portfolio operations, safety and soundness, and mission of enterprises.

Sec. 183. Conforming and technical amendments.

Sec. 184. Study of alternative secondary market systems.

Sec. 185. Effective date.

TITLE II--FEDERAL HOME LOAN BANKS

Sec. 201. Definitions.

Sec. 202. Directors.

Sec. 203. Federal Housing Finance Agency oversight of Federal Home Loan Banks.

Sec. 204. Joint activities of banks.

Sec. 205. Sharing of information between Federal Home Loan Banks.

Sec. 206. Reorganization of banks and voluntary merger.

Sec. 207. Securities and Exchange Commission disclosure.

Sec. 208. Community financial institution members.

Sec. 209. Technical and conforming amendments.

Sec. 210. Study of affordable housing program use for long-term care facilities.

Sec. 211. Effective date.

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

Subtitle A--Office of Federal Housing Enterprise Oversight

Sec. 301. Abolishment of OFHEO.

Sec. 302. Continuation and coordination of certain regulations.

Sec. 303. Transfer and rights of employees of OFHEO.

Sec. 304. Transfer of property and facilities.

Subtitle B--Federal Housing Finance Board

Sec. 321. Abolishment of the Federal Housing Finance Board.

Sec. 322. Continuation and coordination of certain regulations.

Sec. 323. Transfer and rights of employees of the Federal Housing Finance Board.

Sec. 324. Transfer of property and facilities.

Subtitle C--Department of Housing and Urban Development

Sec. 341. Termination of enterprise-related functions.

Sec. 342. Continuation and coordination of certain regulations.

Sec. 343. Transfer and rights of employees.

Sec. 344. Transfer of appropriations, property, and facilities.

SEC. 2. DEFINITIONS.

Section 1303 of the Housing and Community Development Act of 1992 (12 U.S.C. 4502) is amended--

(1) in paragraph (7), by striking `an enterprise' and inserting `a regulated entity';

(2) by striking `the enterprise' each place such term appears (except in paragraphs (4) and (18)) and inserting `the regulated entity';

(3) in paragraph (5), by striking `Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development' and inserting `Federal Housing Finance Agency';

(4) in each of paragraphs (8), (9), (10), and (19), by striking `Secretary' each place that term appears and inserting `Director';

(5) in paragraph (13), by inserting `, with respect to an enterprise,' after `means';

(6) by redesignating paragraphs (16) through (19) as paragraphs (20) through (23), respectively;

(7) by striking paragraphs (14) and (15) and inserting the following new paragraphs:

`(18) REGULATED ENTITY- The term `regulated entity' means--

`(A) the Federal National Mortgage Association and any affiliate thereof;

`(B) the Federal Home Loan Mortgage Corporation and any affiliate thereof; and

`(C) each Federal home loan bank.

`(19) REGULATED ENTITY-AFFILIATED PARTY- The term `regulated entity-affiliated party' means--

`(A) any director, officer, employee, or controlling stockholder of, or agent for, a regulated entity;

`(B) any shareholder, affiliate, consultant, or joint venture partner of a regulated entity, and any other person, as determined by the Director (by regulation or on a case-by-case basis) that participates in the conduct of the affairs of a regulated entity;

`(C) any independent contractor for a regulated entity (including any attorney, appraiser, or accountant), if--

`(i) the independent contractor knowingly or recklessly participates in--

`(I) any violation of any law or regulation;

`(II) any breach of fiduciary duty; or

`(III) any unsafe or unsound practice; and

`(ii) such violation, breach, or practice caused, or is likely to cause, more than a minimal financial loss to, or a significant adverse effect on, the regulated entity; and'.

`(D) any not-for-profit corporation that receives its principal funding, on an ongoing basis, from any regulated entity.';

(8) by redesignating paragraphs (8) through (13) as paragraphs (12) through (17), respectively; and

(9) by inserting after paragraph (7) the following new paragraph:

`(11) FEDERAL HOME LOAN BANK- The term `Federal home loan bank' means a bank established under the authority of the Federal Home Loan Bank Act.';

(10) by redesignating paragraphs (2) through (7) as paragraphs (5) through (10), respectively; and

(11) by inserting after paragraph (1) the following new paragraphs:

`(2) AGENCY- The term `Agency' means the Federal Housing Finance Agency.

`(3) AUTHORIZING STATUTES- The term `authorizing statutes' means--

`(A) the Federal National Mortgage Association Charter Act;

`(B) the Federal Home Loan Mortgage Corporation Act; and

`(C) the Federal Home Loan Bank Act.

`(4) BOARD- The term `Board' means the Housing Finance Oversight Board established under section 1313B.'.

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

Subtitle A--Improvement of Safety and Soundness

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

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

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

`(a) Establishment- There is established the Federal Housing Finance Agency, which shall be an independent agency of the Federal Government.

`(b) General Supervisory and Regulatory Authority-

`(1) IN GENERAL- Each regulated entity shall, to the extent provided in this title, be subject to the supervision and regulation of the Agency.

`(2) AUTHORITY OVER FANNIE MAE, FREDDIE MAC, AND FEDERAL HOME LOAN BANKS- The Director of the Federal Housing Finance Agency shall have general supervisory and regulatory authority over each regulated entity and shall exercise such general regulatory authority, including such duties and authorities set forth under section 1313 of this Act, to ensure that the purposes of this Act, the authorizing statutes, and any other applicable law are carried out.

`(c) Savings Provision- The authority of the Director to take actions under subtitles B and C shall not in any way limit the general supervisory and regulatory authority granted to the Director.

`SEC. 1312. DIRECTOR.

`(a) Establishment of Position- There is established the position of the Director of the Federal Housing Finance Agency, who shall be the head of the Agency.

`(b) Appointment; Term-

`(1) APPOINTMENT- The Director shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a demonstrated understanding of capital markets, including the mortgage securities markets and housing finance.

`(2) TERM AND REMOVAL- The Director shall be appointed for a term of 5 years and may be removed by the President only for cause.

`(3) VACANCY- A vacancy in the position of Director that occurs before the expiration of the term for which a Director was appointed shall be filled in the manner established under paragraph (1), and the Director appointed to fill such vacancy shall be appointed only for the remainder of such term.

`(4) SERVICE AFTER END OF TERM- An individual may serve as the Director after the expiration of the term for which appointed until a successor has been appointed.

`(5) TRANSITIONAL PROVISION- Notwithstanding paragraphs (1) and (2), the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development shall serve as the Director until a successor has been appointed under paragraph (1).

`(c) Deputy Director of the Division of Enterprise Regulation-

`(1) IN GENERAL- The Agency shall have a Deputy Director of the Division of Enterprise Regulation, who shall be appointed by the Director from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight and of mortgage securities markets and housing finance.

`(2) FUNCTIONS- The Deputy Director of the Division of Enterprise Regulation shall have such functions, powers, and duties with respect to the oversight of the enterprises as the Director shall prescribe.

`(d) Deputy Director of the Division of Federal Home Loan Bank Regulation-

`(1) IN GENERAL- The Agency shall have a Deputy Director of the Division of Federal Home Loan Bank Regulation, who shall be appointed by the Director from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight and of the Federal Home Loan Bank System and housing finance.

`(2) FUNCTIONS- The Deputy Director of the Division of Federal Home Loan Bank Regulation shall have such functions, powers, and duties with respect to the oversight of the Federal home loan banks as the Director shall prescribe.

`(e) Deputy Director for Housing-

`(1) IN GENERAL- The Agency shall have a Deputy Director for Housing, who shall be appointed by the Director from among individuals who are citizens of the United States, and have a demonstrated understanding of the housing markets and housing finance.

`(2) FUNCTIONS- The Deputy Director for Housing shall have such functions, powers, and duties with respect to the oversight of the housing mission and goals of the enterprises, and with respect to oversight of the housing mission of the Federal home loan banks, as the Director shall prescribe.

`(f) Limitations- The Director and each of the Deputy Directors may not--

`(1) have any direct or indirect financial interest in any regulated entity or regulated entity-affiliated party;

`(2) hold any office, position, or employment in any regulated entity or regulated entity-affiliated party; or

`(3) have served as an executive officer or director of any regulated entity, or regulated entity-affiliated party, at any time during the 3-year period ending on the date of appointment of such individual as Director or Deputy Director.

`(g) Ombudsman- The Director shall establish, by regulation, an Office of the Ombudsman in the Agency. Such regulations shall provide that the Ombudsman will consider complaints and appeals from any regulated entity and any person that has a business relationship with a regulated entity and shall specify the duties and authority of the Ombudsman.'.

(b) Appointment of Director- Notwithstanding any other provision of law or of this Act, the President may, any time after the date of the enactment of this Act, appoint an individual to serve as the Director of the Federal Housing Finance Agency, as such office is established by the amendment made by subsection (a). This subsection shall take effect on the date of the enactment of this Act.

SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR.

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

`SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR.

`(a) Duties-

`(1) PRINCIPAL DUTIES- The principal duties of the Director shall be--

`(A) to oversee the operations of each regulated entity; and

`(B) to ensure that--

`(i) each regulated entity operates in a safe and sound manner, including maintenance of adequate capital and internal controls;

`(ii) the operations and activities of each regulated entity foster liquid, efficient, competitive, and resilient national housing finance markets that minimize the cost of housing finance (including activities relating to mortgages on housing for low- and moderate- income families involving a reasonable economic return that may be less than the return earned on other activities);

`(iii) each regulated entity complies with this title and the rules, regulations, guidelines, and orders issued under this title and the authorizing statutes; and

`(iv) each regulated entity carries out its statutory mission only through activities that are consistent with this title and the authorizing statutes.

`(2) SCOPE OF AUTHORITY- The authority of the Director shall include the authority--

`(A) to review and, if warranted based on the principal duties described in paragraph (1), reject any acquisition or transfer of a controlling interest in an enterprise; and

`(B) to exercise such incidental powers as may be necessary or appropriate to fulfill the duties and responsibilities of the Director in the supervision and regulation of each regulated entity.

`(b) Delegation of Authority- The Director may delegate to officers or employees of the Agency, including each of the Deputy Directors, any of the functions, powers, or duties of the Director, as the Director considers appropriate.

`(c) Litigation Authority-

`(1) IN GENERAL- In enforcing any provision of this title, any regulation or order prescribed under this title, or any other provision of law, rule, regulation, or order, or in any other action, suit, or proceeding to which the Director is a party or in which the Director is interested, and in the administration of conservatorships and receiverships, the Director may act in the Director's own name and through the Director's own attorneys, or request that the Attorney General of the United States act on behalf of the Director.

`(2) CONSULTATION WITH ATTORNEY GENERAL- The Director shall provide notice to, and consult with, the Attorney General of the United States before taking an action under paragraph (1) of this subsection or under section 1344(a), 1345(d), 1348(c), 1372(e), 1375(a), 1376(d), or 1379D(c), except that, if the Director determines that any delay caused by such prior notice and consultation may adversely affect the safety and soundness responsibilities of the Director under this title, the Director shall notify the Attorney General as soon as reasonably possible after taking such action.

`(3) SUBJECT TO SUIT- Except as otherwise provided by law, the Director shall be subject to suit (other than suits on claims for money damages) by a regulated entity or director or officer thereof with respect to any matter under this title or any other applicable provision of law, rule, order, or regulation under this title, in the United States district court for the judicial district in which the regulated entity has its principal place of business, or in the United States District Court for the District of Columbia, and the Director may be served with process in the manner prescribed by the Federal Rules of Civil Procedure.

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

`(a) Standards- The Director shall establish standards, by regulation, guideline, or order, for each regulated entity relating to--

`(1) adequacy of internal controls and information systems taking into account the nature and scale of business operations;

`(2) independence and adequacy of internal audit systems;

`(3) management of credit and counterparty risk, including systems to identify concentrations of credit risk and prudential limits to restrict exposure of the regulated entity to a single counterparty or groups of related counterparties;

`(4) management of interest rate risk exposure;

`(5) management of market risk, including standards that provide for systems that accurately measure, monitor, and control market risks and, as warranted, that establish limitations on market risk;

`(6) adequacy and maintenance of liquidity and reserves;

`(7) management of any asset and investment portfolio;

`(8) investments and acquisitions by a regulated entity, to ensure that they are consistent with the purposes of this Act and the authorizing statutes;

`(9) maintenance of adequate records, in accordance with consistent accounting policies and practices that enable the Director to evaluate the financial condition of the regulated entity;

`(10) issuance of subordinated debt by that particular regulated entity, as the Director considers necessary;

`(11) overall risk management processes, including adequacy of oversight by senior management and the board of directors and of processes and policies to identify, measure, monitor, and control material risks, including reputational risks, and for adequate, well-tested business resumption plans for all major systems with remote site facilities to protect against disruptive events; and

`(12) such other operational and management standards as the Director determines to be appropriate.

`(b) Failure to Meet Standards-

`(1) PLAN REQUIREMENT-

`(A) IN GENERAL- If the Director determines that a regulated entity fails to meet any standard established under subsection (a)--

`(i) if such standard is established by regulation, the Director shall require the regulated entity to submit an acceptable plan to the Director within the time allowed under subparagraph (C); and

`(ii) if such standard is established by guideline, the Director may require the regulated entity to submit a plan described in clause (i).

`(B) CONTENTS- Any plan required under subparagraph (A) shall specify the actions that the regulated entity will take to correct the deficiency. If the regulated entity is undercapitalized, the plan may be a part of the capital restoration plan for the regulated entity under section 1369C.

`(C) DEADLINES FOR SUBMISSION AND REVIEW- The Director shall by regulation establish deadlines that--

`(i) provide the regulated entities with reasonable time to submit plans required under subparagraph (A), and generally require a regulated entity to submit a plan not later than 30 days after the Director determines that the entity fails to meet any standard established under subsection (a); and

`(ii) require the Director to act on plans expeditiously, and generally not later than 30 days after the plan is submitted.

`(2) REQUIRED ORDER UPON FAILURE TO SUBMIT OR IMPLEMENT PLAN- If a regulated entity fails to submit an acceptable plan within the time allowed under paragraph (1)(C), or fails in any material respect to implement a plan accepted by the Director, the following shall apply:

`(A) REQUIRED CORRECTION OF DEFICIENCY- The Director shall, by order, require the regulated entity to correct the deficiency.

`(B) OTHER AUTHORITY- The Director may, by order, take one or more of the following actions until the deficiency is corrected:

`(i) Prohibit the regulated entity from permitting its average total assets (as such term is defined in section 1316(b)) during any calendar quarter to exceed its average total assets during the preceding calendar quarter, or restrict the rate at which the average total assets of the entity may increase from one calendar quarter to another.

`(ii) Require the regulated entity--

`(I) in the case of an enterprise, to increase its ratio of core capital to assets.

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

`(iii) Require the regulated entity to take any other action that the Director determines will better carry out the purposes of this section than any of the actions described in this subparagraph.

`(3) MANDATORY RESTRICTIONS- In complying with paragraph (2), the Director shall take one or more of the actions described in clauses (i) through (iii) of paragraph (2)(B) if--

`(A) the Director determines that the regulated entity fails to meet any standard prescribed under subsection (a);

`(B) the regulated entity has not corrected the deficiency; and

`(C) during the 18-month period before the date on which the regulated entity first failed to meet the standard, the entity underwent extraordinary growth, as defined by the Director.

`(c) Other Enforcement Authority not Affected- The authority of the Director under this section is in addition to any other authority of the Director.'.

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

SEC. 103. HOUSING FINANCE OVERSIGHT BOARD.

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

`SEC. 1313B. HOUSING FINANCE OVERSIGHT BOARD.

`(a) In General- There is established the Housing Finance Oversight Board.

`(b) Duties-

`(1) IN GENERAL- The Board shall advise the Director with respect to overall strategies and policies in carrying out the duties of the Director under this title, at the request of the Director and at the initiative of the Board, and shall carry out such functions as otherwise provided by law.

`(2) LIMITATION- The Director may not delegate to the Board any of the functions, powers, or duties of the Director.

`(c) Composition- The Board shall be comprised of 5 members, as follows:

`(1) One member shall be the Director, who shall serve as the Chairperson of the Board.

`(2) One member shall be the Secretary of the Treasury or the designee of the Secretary.

`(3) One member shall be the Secretary of Housing and Urban Development or the designee of the Secretary.

`(4) Two members shall be appointed by the President, by and with the advice and consent of the Senate, who shall include--

`(A) one individual who has extensive experience and expertise in the capital markets (including debt markets), the secondary mortgage market, and mortgage-backed securities; and

`(B) one individual who has extensive experience and expertise in mortgage finance (including single family and multifamily housing mortgage finance), development of affordable housing, and economic development and revitalization.

`(d) Terms and Vacancies-

`(1) TERMS- Each member of the Board pursuant to paragraph (4) shall be appointed for a term of 3 years, and may be removed by the President only for cause.

`(2) VACANCIES- A member of the Board appointed to fill a vacancy occurring before the expiration of the term for which the member's predecessor was appointed shall be appointed only for the remainder of that term. A member of the Board may serve after the expiration of the member's term until a successor has been appointed.

`(e) Prohibition of Additional Compensation- Notwithstanding any other provision of law, members of Board pursuant to paragraphs (1), (2), and (3) shall not receive additional compensation by reason of service on the Board.

`(f) Limitations- Each member of the Board may not--

`(1) have any direct or indirect financial interest in any regulated entity or regulated entity-affiliated party; or

`(2) hold any office, position, or employment in any regulated entity or regulated entity-affiliated party.

`(g) Full-Time Members and Staff-

`(1) FULL-TIME MEMBERS- The members of the Board pursuant to subsection (c)(4) shall serve on a full-time basis.

`(2) STAFF- The staff of the Board shall be appointed subject to the provisions of title 5, United States Code, governing appointments in the competitive service, and shall be paid in accordance with the provisions of chapter 51 and subchapter III of chapter 53 of that title relating to classification and General Schedule pay rates, except that each member of the Board pursuant to paragraph (4) may appoint one staff member without regard to the such provisions governing appointments in the competitive service and such staff members may be paid by the Board without regard to the such provisions relating to classification and General Schedule pay rates.

`(h) Meetings-

`(1) IN GENERAL- The Board shall meet upon notice by the Director, but in no event shall the Board meet less frequently than once every 3 months.

`(2) SPECIAL MEETINGS- Any member of the Board may, upon giving written notice to the Director, require a special meeting of the Board, which shall be convened by the Director within 30 days after such notice.

`(i) Testimony- On an annual basis, the Board shall testify before Congress regarding--

`(1) the safety and soundness of the regulated entities;

`(2) any material deficiencies in the conduct of the operations of the regulated entities;

`(3) the overall operational status of the regulated entities;

`(4) an evaluation of the performance of the regulated entities in carrying out their respective missions;

`(5) operations, resources, and performance of the Agency and the Board; and

`(6) such other matters relating to the Agency, the Board, and the regulated entities, and their fulfillment of their missions, as the Board determines appropriate.

`(j) Costs- Costs of the Board, including staff, shall be paid by the Agency as a cost and expense of the Agency.'.

(b) Annual Report of the Director- Section 1319B(a) of the Housing and Community Development Act of 1992 (12 U.S.C. 4521 (a)) is amended--

(1) in paragraph (3), by striking `and' at the end; and

(2) by striking paragraph (4) and inserting the following new paragraphs:

`(4) an assessment of the Board with respect to--

`(A) the safety and soundness of the regulated entities;

`(B) any material deficiencies in the conduct of the operations of the regulated entities;

`(C) the overall operational status of the regulated entities;

`(D) an evaluation of the performance of the regulated entities in carrying out their missions, including compliance of the enterprises with the housing goals under subpart B of part 2 of this subtitle and compliance of the Federal home loan banks with the community investment and affordable housing programs under subsections (i) and (j) of section 10 of the Federal Home Loan Bank Act;

`(E) an evaluation of the performance of the Agency in fulfilling its duties and responsibilities under law; and

`(F) such other matters relating to the Board and the fulfillment of its duties as the Board considers appropriate;

`(5) operations, resources, and performance of the Agency; and

`(6) such other matters relating to the Agency and its fulfillment of its mission.'.

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

Section 1314 of the Housing and Community Development Act of 1992 (12 U.S.C. 4514) is amended--

(1) in the section heading, by striking `enterprises' and inserting `regulated entities';

(2) in subsection (a)--

(A) in the subsection heading, by striking `Special Reports and Reports of Financial Condition' and inserting `Regular and Special Reports';

(B) in paragraph (1)--

(i) in the paragraph heading, by striking `FINANCIAL CONDITION' and inserting `REGULAR REPORTS'; and

(ii) by striking `reports of financial condition and operations' and inserting `regular reports on the condition (including financial condition), management, activities, or operations of the regulated entity, as the Director considers appropriate'; and

(C) in paragraph (2), after `submit special reports' insert `on any of the topics specified in paragraph (1) or such other topics'; and

(3) by adding at the end the following new subsection:

`(c) Reports of Fraudulent Financial Transactions-

`(1) REQUIREMENT TO REPORT- The Director shall require a regulated entity to submit to the Director a timely report upon discovery by the regulated entity that it has purchased or sold a fraudulent loan or financial instrument or suspects a possible fraud relating to a purchase or sale of any loan or financial instrument. The Director shall require the regulated entities to establish and maintain procedures designed to discover any such transactions.

`(2) PROTECTION FROM LIABILITY FOR REPORTS-

`(A) IN GENERAL- If a regulated entity makes a report pursuant to paragraph (1), or a regulated entity-affiliated party makes, or requires another to make, such a report, and such report is made in a good faith effort to comply with the requirements of paragraph (1), such regulated entity or regulated entity-affiliated party shall not be liable to any person under any law or regulation of the United States, any constitution, law, or regulation of any State or political subdivision of any State, or under any contract or other legally enforceable agreement (including any arbitration agreement), for such report or for any failure to provide notice of such report to the person who is the subject of such report or any other person identified in the report.

`(B) RULE OF CONSTRUCTION- Subparagraph (A) shall not be construed as creating--

`(i) any inference that the term `person', as used in such subparagraph, may be construed more broadly than its ordinary usage so as to include any government or agency of government; or

`(ii) any immunity against, or otherwise affecting, any civil or criminal action brought by any government or agency of government to enforce any constitution, law, or regulation of such government or agency.'.

SEC. 105. DISCLOSURE OF CHARITABLE CONTRIBUTIONS BY ENTERPRISES.

Section 1314 of the Housing and Community Development Act of 1992 (12 U.S.C. 4514), as amended by the preceding provisions of this Act, is further amended by adding at the end the following new subsection:

`(d) DISCLOSURE OF CHARITABLE CONTRIBUTIONS BY ENTERPRISES-

`(1) REQUIRED DISCLOSURE- The Director shall, by regulation, require each enterprise to submit a report annually, in a format designated by the Director, containing the following information:

`(A) TOTAL VALUE- The total value of contributions made by the enterprise to nonprofit organizations during its previous fiscal year.

`(B) SUBSTANTIAL CONTRIBUTIONS- If the value of contributions made by the enterprise to any nonprofit organization during its previous fiscal year exceeds the designated amount, the name of that organization and the value of contributions.

`(C) SUBSTANTIAL CONTRIBUTIONS TO INSIDER-AFFILIATED CHARITIES- Identification of each contribution whose value exceeds the designated amount that were made by the enterprise during the enterprise's previous fiscal year to any nonprofit organization of which a director, officer, or controlling person of the enterprise, or a spouse thereof, was a director or trustee, the name of such nonprofit organization, and the value of the contribution.

`(2) DEFINITIONS- For purposes of this subsection--

`(A) the term `designated amount' means such amount as may be designated by the Director by regulation, consistent with the public interest and the protection of investors for purposes of this subsection; and

`(B) the Director may, by such regulations as the Director deems necessary or appropriate in the public interest, define the terms officer and controlling person.

`(3) PUBLIC AVAILABILITY- The Director shall make the information submitted pursuant to this subsection publicly available.'.

SEC. 106. ASSESSMENTS.

Section 1316 of the Housing and Community Development Act of 1992 (12 U.S.C. 4516) is amended--

(1) by striking subsection (a) and inserting the following new subsection:

`(a) Annual Assessments- The Director shall establish and collect from the regulated entities annual assessments in an amount not exceeding the amount sufficient to provide for reasonable costs and expenses of the Agency, including--

`(1) the expenses of any examinations under section 1317 of this Act and under section 20 of the Federal Home Loan Bank Act;

`(2) the expenses of obtaining any reviews and credit assessments under section 1319; and

`(3) such amounts in excess of actual expenses for any given year as deemed necessary by the Director to maintain a working capital fund in accordance with subsection (e).';

(2) in subsection (b)--

(A) in the subsection heading, by striking `Enterprises' and inserting `Regulated Entities' ;

(B) by realigning paragraph (2) two ems from the left margin, so as to align the left margin of such paragraph with the left margins of paragraph (1);

(i) by striking `Each enterprise' and inserting `Each regulated entity';

(ii) by striking `each enterprise' and inserting `each regulated entity'; and

(iii) by striking `both enterprises' and inserting `all of the regulated entities'; and

(D) in paragraph (3)--

(i) in subparagraph (B), by striking `subparagraph (A)' and inserting `clause (i)';

(ii) by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii) and (ii), respectively, and realigning such clauses, as so redesignated, so as to be indented 6 ems from the left margin;

(iii) by striking the matter that precedes clause (i), as so redesignated, and inserting the following:

`(3) DEFINITION OF TOTAL ASSETS- For purposes of this section, the term `total assets' means as follows:

`(A) ENTERPRISES- With respect to an enterprise, the sum of--'; and

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

`(B) FEDERAL HOME LOAN BANKS- With respect to a Federal home loan bank, the total assets of the Bank, as determined by the Director in accordance with generally accepted accounting principles.';

(3) by striking subsection (c) and inserting the following new subsection:

`(c) Increased Costs of Regulation-

`(1) INCREASE FOR INADEQUATE CAPITALIZATION- The semiannual payments made pursuant to subsection (b) by any regulated entity that is not classified (for purposes of subtitle B) as adequately capitalized may be increased, as necessary, in the discretion of the Director to pay additional estimated costs of regulation of the regulated entity.

`(2) ADJUSTMENT FOR ENFORCEMENT ACTIVITIES- The Director may adjust the amounts of any semiannual assessments for an assessment under subsection (a) that are to be paid pursuant to subsection (b) by a regulated entity, as necessary in the discretion of the Director, to ensure that the costs of enforcement activities under subtitle B and C for a regulated entity are borne only by such regulated entity.

`(3) ADDITIONAL ASSESSMENT FOR DEFICIENCIES- If at any time, as a result of increased costs of regulation of a regulated entity that is not classified (for purposes of subtitle B) as adequately capitalized or as the result of supervisory or enforcement activities under subtitle B or C for a regulated entity, the amount available from any semiannual payment made by such regulated entity pursuant to subsection (b) is insufficient to cover the costs of the Agency with respect to such entity, the Director may make and collect from such regulated entity an immediate assessment to cover the amount of such deficiency for the semiannual period. If, at the end of any semiannual period during which such an assessment is made, any amount remains from such assessment, such remaining amount shall be deducted from the assessment for such regulated entity for the following semiannual period.';

(4) in subsection (d), by striking `If' and inserting `Except with respect to amounts collected pursuant to subsection (a)(3), if'; and

(5) by striking subsections (e) through (g) and inserting the following new subsections:

`(e) Working Capital Fund- At the end of each year for which an assessment under this section is made, the Director shall remit to each regulated entity any amount of assessment collected from such regulated entity that is attributable to subsection (a)(3) and is in excess of the amount the Director deems necessary to maintain a working capital fund.

`(f) Treatment of Assessments-

`(1) DEPOSIT- Amounts received by the Director from assessments under this section may be deposited by the Director in the manner provided in section 5234 of the Revised Statutes (12 U.S.C. 192) for monies deposited by the Comptroller of the Currency.

`(2) NOT GOVERNMENT FUNDS- The amounts received by the Director from any assessment under this section shall not be construed to be Government or public funds or appropriated money.

`(3) NO APPORTIONMENT OF FUNDS- Notwithstanding any other provision of law, the amounts received by the Director from any assessment under this section shall not be subject to apportionment for the purpose of chapter 15 of title 31, United States Code, or under any other authority.

`(4) USE OF FUNDS- The Director may use any amounts received by the Director from assessments under this section for compensation of the Director and other employees of the Agency and for all other expenses of the Director and the Agency.

`(5) AVAILABILITY OF OVERSIGHT FUND AMOUNTS- Notwithstanding any other provision of law, any amounts remaining in the Federal Housing Enterprises Oversight Fund established under this section (as in effect before the effective date under section 185 of the Federal Housing Finance Reform Act of 2005), and any amounts remaining from assessments on the Federal Home Loan banks pursuant to section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 1438(b)), shall, upon such effective date, be treated for purposes of this subsection as amounts received from assessments under this section.

`(g) Budget and Financial Management-

`(1) FINANCIAL OPERATING PLANS AND FORECASTS- The Director shall provide to the Director of the Office of Management and Budget copies of the Director's financial operating plans and forecasts as prepared by the Director in the ordinary course of the Agency's operations, and copies of the quarterly reports of the Agency's financial condition and results of operations as prepared by the Director in the ordinary course of the Agency's operations.

`(2) FINANCIAL STATEMENTS- The Agency shall prepare annually a statement of assets and liabilities and surplus or deficit; a statement of income and expenses; and a statement of sources and application of funds.

`(3) FINANCIAL MANAGEMENT SYSTEMS- The Agency shall implement and maintain financial management systems that comply substantially with Federal financial management systems requirements, applicable Federal accounting standards, and that uses a general ledger system that accounts for activity at the transaction level.

`(4) ASSERTION OF INTERNAL CONTROLS- The Director shall provide to the Comptroller General an assertion as to the effectiveness of the internal controls that apply to financial reporting by the Agency, using the standards established in section 3512 (c) of title 31, United States Code.

`(5) RULE OF CONSTRUCTION- This subsection may not be construed as implying any obligation on the part of the Director to consult with or obtain the consent or approval of the Director of the Office of Management and Budget with respect to any reports, plans, forecasts, or other information referred to in paragraph (1) or any jurisdiction or oversight over the affairs or operations of the Agency.

`(h) Audit of Agency-

`(1) IN GENERAL- The Comptroller General shall annually audit the financial transactions of the Agency in accordance with the U.S. generally accepted government auditing standards as may be prescribed by the Comptroller General of the United States. The audit shall be conducted at the place or places where accounts of the Agency are normally kept. The representatives of the Government Accountability Office shall have access to the personnel and to all books, accounts, documents, papers, records (including electronic records), reports, files, and all other papers, automated data, things, or property belonging to or under the control of or used or employed by the Agency pertaining to its financial transactions and necessary to facilitate the audit, and such representatives shall be afforded full facilities for verifying transactions with the balances or securities held by depositaries, fiscal agents, and custodians. All such books, accounts, documents, records, reports, files, papers, and property of the Agency shall remain in possession and custody of the Agency. The Comptroller General may obtain and duplicate any such books, accounts, documents, records, working papers, automated data and files, or other information relevant to such audit without cost to the Comptroller General and the Comptroller General's right of access to such information shall be enforceable pursuant to section 716(c) of title 31, United States Code.

`(2) REPORT- The Comptroller General shall submit to the Congress a report of each annual audit conducted under this subsection. The report to the Congress shall set forth the scope of the audit and shall include the statement of assets and liabilities and surplus or deficit, the statement of income and expenses, the statement of sources and application of funds, and such comments and information as may be deemed necessary to inform Congress of the financial operations and condition of the Agency, together with such recommendations with respect thereto as the Comptroller General may deem advisable. A copy of each report shall be furnished to the President and to the Agency at the time submitted to the Congress.

`(3) ASSISTANCE AND COSTS- For the purpose of conducting an audit under this subsection, the Comptroller General may, in the discretion of the Comptroller General, employ by contract, without regard to section 5 of title 41, United States Code, professional services of firms and organizations of certified public accountants for temporary periods or for special purposes. Upon the request of the Comptroller General, the Director of the Agency shall transfer to the Government Accountability Office from funds available, the amount requested by the Comptroller General to cover the full costs of any audit and report conducted by the Comptroller General. The Comptroller General shall credit funds transferred to the account established for salaries and expenses of the Government Accountability Office, and such amount shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report.'.

SEC. 107. EXAMINERS AND ACCOUNTANTS.

(a) Examinations- Section 1317 of the Housing and Community Development Act of 1992 (12 U.S.C. 4517) is amended--

(1) in subsection (a), by adding after the period at the end the following: `Each examination under this subsection of a regulated entity shall include a review of the procedures required to be established and maintained by the regulated entity pursuant to section 1314(c) (relating to fraudulent financial transactions) and the report regarding each such examination shall describe any problems with such procedures maintained by the regulated entity.';

(2) in subsection (b)--

(A) by inserting `of a regulated entity' after `under this section'; and

(B) by striking `to determine the condition of an enterprise for the purpose of ensuring its financial safety and soundness' and inserting `or appropriate'; and

(3) in subsection (c)--

(A) in the second sentence, by inserting `to conduct examinations under this section' before the period; and

(B) in the third sentence, by striking `from amounts available in the Federal Housing Enterprises Oversight Fund'.

(b) Enhanced Authority to Hire Examiners and Accountants- Section 1317 of the Housing and Community Development Act of 1992 (12 U.S.C. 4517) is amended by adding at the end the following new subsection:

`(g) Appointment of Accountants, Economists, Specialists, and Examiners-

`(1) APPLICABILITY- This section applies with respect to any position of examiner, accountant, specialist in financial markets, specialist in technology, and economist at the Agency, with respect to supervision and regulation of the regulated entities, that is in the competitive service.

`(2) APPOINTMENT AUTHORITY- The Director may appoint candidates to any position described in paragraph (1)--

`(A) in accordance with the statutes, rules, and regulations governing appointments in the excepted service; and

`(B) notwithstanding any statutes, rules, and regulations governing appointments in the competitive service.'.

(1) in the section heading, by striking `reports' and inserting `gao audits';

(2) in the third sentence, by striking `the Board and' each place such term appears; and

(3) by striking the first two sentences and inserting the following: `The Federal home loan banks shall be subject to examinations by the Director to the extent provided in section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517).'.

SEC. 108. PROHIBITION AND WITHHOLDING OF EXECUTIVE COMPENSATION.

(a) In General- Section 1318 of the Housing and Community Development Act of 1992 (12 U.S.C. 4518) is amended--

(1) in the section heading, by striking `of excessive' and inserting `and withholding of executive';

(2) by redesignating subsection (b) as subsection (d); and

(3) by inserting after subsection (a) the following new subsections:

`(b) Factors- In making any determination under subsection (a), the Director may take into consideration any factors the Director considers relevant, including any wrongdoing on the part of the executive officer, and such wrongdoing shall include any fraudulent act or omission, breach of trust or fiduciary duty, violation of law, rule, regulation, order, or written agreement, and insider abuse with respect to the regulated entity. The approval of an agreement or contract pursuant to section 309(d)(3)(B) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(d)(3)(B)) or section 303(h)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(h)(2)) shall not preclude the Director from making any subsequent determination under subsection (a).

`(c) Withholding of Compensation- In carrying out subsection (a), the Director may require a regulated entity to withhold any payment, transfer, or disbursement of compensation to an executive officer, or to place such compensation in an escrow account, during the review of the reasonableness and comparability of compensation.'.

(b) Conforming Amendments-

(1) FANNIE MAE- Section 309(d) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(d)) is amended by adding at the end the following new paragraph:

`(4) Notwithstanding any other provision of this section, the corporation shall not transfer, disburse, or pay compensation to any executive officer, or enter into an agreement with such executive officer, without the approval of the Director, for matters being reviewed under section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).'.

(2) FREDDIE MAC- Section 303(h) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(h)) is amended by adding at the end the following new paragraph:

`(4) Notwithstanding any other provision of this section, the Corporation shall not transfer, disburse, or pay compensation to any executive officer, or enter into an agreement with such executive officer, without the approval of the Director, for matters being reviewed under section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).'.

(3) FEDERAL HOME LOAN BANKS- Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is amended by adding at the end the following new subsection:

`(l) Withholding of Compensation- Notwithstanding any other provision of this section, a Federal home loan bank shall not transfer, disburse, or pay compensation to any executive officer, or enter into an agreement with such executive officer, without the approval of the Director, for matters being reviewed under section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).'.

SEC. 109. REVIEWS OF REGULATED ENTITIES.

Section 1319 of the Housing and Community Development Act of 1992 (12 U.S.C. 4519) is amended--

(1) by striking the section designation and heading and inserting the following:

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

and

(2) by inserting after `any entity' the following: `that the Director considers appropriate, including an entity'.

SEC. 110. REGULATIONS AND ORDERS.

Section 1319G of the Housing and Community Development Act of 1992 (12 U.S.C. 4526) is amended--

(1) by striking subsection (a) and inserting the following new subsection:

`(a) Authority- The Director shall issue any regulations, guidelines, and orders necessary to carry out the duties of the Director under this title and each of the authorizing statutes to ensure that the purposes of this title and such Acts are accomplished.';

(2) in subsection (b), by inserting `, this title, or any of the authorizing statutes' after `under this section'; and

(3) by striking subsection (c).

SEC. 111. RISK-BASED CAPITAL REQUIREMENTS.

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

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

`(a) In General-

`(1) ENTERPRISES- The Director shall, by regulation, establish risk-based capital requirements for the enterprises to ensure that the enterprises operate in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of the enterprises.

`(2) FEDERAL HOME LOAN BANKS- The Director shall establish risk-based capital standards under section 6 of the Federal Home Loan Bank Act for the Federal home loan banks.

`(b) Confidentiality of Information- Any person that receives any book, record, or information from the Director or a regulated entity to enable the risk-based capital requirements established under this section to be applied shall--

`(1) maintain the confidentiality of the book, record, or information in a manner that is generally consistent with the level of confidentiality established for the material by the Director or the regulated entity; and

`(2) be exempt from section 552 of title 5, United States Code, with respect to the book, record, or information.

`(c) No Limitation- Nothing in this section shall limit the authority of the Director to require other reports or undertakings, or take other action, in furtherance of the responsibilities of the Director under this Act.'.

(b) Federal Home Loan Banks Risk-Based Capital- Section 6(a)(3) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(3)) is amended--

(1) by striking subparagraph (A) and inserting the following new subparagraph:

`(A) RISK-BASED CAPITAL STANDARDS- The Director shall, by regulation, establish risk-based capital standards for the Federal home loan banks to ensure that the Federal home loan banks operate in a safe and sound manner, with sufficient permanent capital and reserves to support the risks that arise in the operations and management of the Federal home loans banks.'; and

(2) in subparagraph (B), by striking `(A)(ii)' and inserting `(A)'.

SEC. 112. MINIMUM AND CRITICAL CAPITAL LEVELS.

(a) Minimum Capital Level- Section 1362 of the Housing and Community Development Act of 1992 (12 U.S.C. 4612) is amended--

(1) in subsection (a), by striking `In General' and inserting `Enterprises'; and

(2) by striking subsection (b) and inserting the following new subsections:

`(b) Federal Home Loan Banks- For purposes of this subtitle, the minimum capital level for each Federal home loan bank shall be the minimum capital required to be maintained to comply with the leverage requirement for the bank established under section 6(a)(2) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(2)).

`(c) Establishment of Revised Minimum Capital Levels- Notwithstanding subsections (a) and (b) and notwithstanding the capital classifications of the regulated entities, the Director may, by regulations issued under section 1319G(b), establish a minimum capital level for the enterprises, for the Federal home loan banks, or for both the enterprises and the banks, that is higher than the level specified in subsection (a) for the enterprises or the level specified in subsection (b) for the Federal home loan banks, to the extent needed to ensure that the regulated entities operate in a safe and sound manner.

`(d) Authority to Require Temporary Increase- Notwithstanding subsections (a) and (b) and any minimum capital level established pursuant to subsection (c), the Director may, by order, increase the minimum capital level for a regulated entity for such period as the Director may provide if the Director--

`(1) makes any of the determinations specified in subparagraphs (A) through (C) of section 1364(c)(1); or

`(2) determines that the regulated entity has violated any of the prudential management and operations standards established pursuant to section 1313A and, as a result of such violation, is operating in an unsafe and unsound manner.

`(e) Authority to Establish Additional Capital and Reserve Requirements for Particular Programs- The Director may, at any time by order or regulation, establish such capital or reserve requirements with respect to any program or activity of a regulated entity as the Director considers appropriate to ensure that the regulated entity operates in a safe and sound manner, with sufficient capital and reserves to support the risks that arise in the operations and management of the regulated entity.

`(f) Periodic Review- The Director shall periodically review the amount of core capital maintained by the enterprises, the amount of capital retained by the Federal home loan banks, and the minimum capital levels established for such regulated entities pursuant to this section. The Director may, by regulations issued under section 1319G(b), adjust the minimum capital levels as necessary, based on the Director's review.'.

(b) Critical Capital Levels-

(1) IN GENERAL- Section 1363 of the Housing and Community Development Act of 1992 (12 U.S.C. 4613) is amended--

(A) by striking `For' and inserting `(a) Enterprises- For'; and

(B) by adding at the end the following new subsection:

`(b) Federal Home Loan Banks-

`(1) IN GENERAL- For purposes of this subtitle, the critical capital level for each Federal home loan bank shall be such amount of capital as the Director shall, by regulation require.

`(2) CONSIDERATION OF OTHER CRITICAL CAPITAL LEVELS- In establishing the critical capital level under paragraph (1) for the Federal home loan banks, the Director shall take due consideration of the critical capital level established under subsection (a) for the enterprises, with such modifications as the Director determines to be appropriate to reflect the difference in operations between the banks and the enterprises.'.

(2) REGULATIONS- Not later than the expiration of the 180-day period beginning on the effective date under section 185, the Director of the Federal Housing Finance Agency shall issue regulations pursuant to section 1363(b) of the Housing and Community Development Act of 1992 (as added by paragraph (1) of this subsection) establishing the critical capital level under such section.

SEC. 113. REVIEW OF AND AUTHORITY OVER ENTERPRISE ASSETS AND LIABILITIES.

Subtitle B of title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4611 et seq.) is amended--

(1) by striking the subtitle designation and heading and inserting the following:

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

and

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

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

`(a) In General- The Director shall conduct, on a periodic basis, a review of the on-balance sheet and off-balance sheet assets and liabilities of each enterprise.

`(b) Authority to Require Disposition or Acquisition- Pursuant to such a review and notwithstanding the capital classifications of the enterprises, the Director may by order require an enterprise, under such terms and conditions as the Director determines to be appropriate, to dispose of or acquire any asset or liability, if the Director determines that such action is consistent with the safe and sound operation of the enterprise or with the purposes of this Act or any of the authorizing statutes.'.

SEC. 114. CORPORATE GOVERNANCE OF ENTERPRISES.

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

`SEC. 1322A. CORPORATE GOVERNANCE OF ENTERPRISES.

`(a) Board of Directors-

`(1) INDEPENDENCE- A majority of seated members of the board of directors of each enterprise shall be independent board members, as defined under rules set forth by the New York Stock Exchange, as such rules may be amended from time to time.

`(2) FREQUENCY OF MEETINGS- To carry out its obligations and duties under applicable laws, rules, regulations, and guidelines, the board of directors of an enterprise shall meet at least eight times a year and not less than once a calendar quarter.

`(3) NON-MANAGEMENT BOARD MEMBER MEETINGS- The non-management directors of an enterprise shall meet at regularly scheduled executive sessions without management participation.

`(4) QUORUM; PROHIBITION ON PROXIES- For the transaction of business, a quorum of the board of directors of an enterprise shall be at least a majority of the seated board of directors and a board member may not vote by proxy.

`(5) INFORMATION- The management of an enterprise shall provide a board member of the enterprise with such adequate and appropriate information that a reasonable board member would find important to the fulfillment of his or her fiduciary duties and obligations.

`(6) ANNUAL REVIEW- At least annually, the board of directors of each enterprise shall review, with appropriate professional assistance, the requirements of laws, rules, regulations, and guidelines that are applicable to its activities and duties.

`(b) Committees of Boards of Directors-

`(1) FREQUENCY OF MEETINGS- Any committee of the board of directors of an enterprise shall meet with sufficient frequency to carry out its obligations and duties under applicable laws, rules, regulations, and guidelines.

`(2) REQUIRED COMMITTEES- Each enterprise shall provide for the establishment, however styled, of the following committees of the board of directors:

`(A) Audit committee.

`(B) Compensation committee.

`(C) Nominating/corporate governance committee.

Such committees shall be in compliance with the charter, independence, composition, expertise, duties, responsibilities, and other requirements set forth under section 10A(m) of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(m)), with respect to the audit committee, and under rules issued by the New York Stock Exchange, as such rules may be amended from time to time.

`(c) Compensation-

`(1) IN GENERAL- The compensation of board members, executive officers, and employees of an enterprise--

`(A) shall not be in excess of that which is reasonable and appropriate;

`(B) shall be commensurate with the duties and responsibilities of such persons;

`(C) shall be consistent with the long-term goals of the enterprise;

`(D) shall not focus solely on earnings performance, but shall take into account risk management, operational stability and legal and regulatory compliance as well; and

`(E) shall be undertaken in a manner that complies with applicable laws, rules, and regulations.

`(2) REIMBURSEMENT- If an enterprise is required to prepare an accounting restatement due to the material noncompliance of the enterprise, as a result of misconduct, with any financial reporting requirement under the securities laws, the chief executive officer and chief financial officer of the enterprise shall reimburse the enterprise as provided under section 304 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7243). This provision does not otherwise limit the authority of the Agency to employ remedies available to it under its enforcement authorities.

`(d) Code of Conduct and Ethics-

`(1) IN GENERAL- An enterprise shall establish and administer a written code of conduct and ethics that is reasonably designed to assure the ability of board members, executive officers, and employees of the enterprise to discharge their duties and responsibilities, on behalf of the enterprise, in an objective and impartial manner, and that includes standards required under section 406 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7264) and other applicable laws, rules, and regulations.

`(2) REVIEW- Not less than once every three years, an enterprise shall review the adequacy of its code of conduct and ethics for consistency with practices appropriate to the enterprise and make any appropriate revisions to such code.

`(e) Conduct and Responsibilities of Board of Directors- The board of directors of an enterprise shall be responsible for directing the conduct and affairs of the enterprise in furtherance of the safe and sound operation of the enterprise and shall remain reasonably informed of the condition, activities, and operations of the enterprise. The responsibilities of the board of directors shall include having in place adequate policies and procedures to assure its oversight of, among other matters, the following:

`(1) Corporate strategy, major plans of action, risk policy, programs for legal and regulatory compliance and corporate performance, including prudent plans for growth and allocation of adequate resources to manage operations risk.

`(2) Hiring and retention of qualified executive officers and succession planning for such executive officers.

`(3) Compensation programs of the enterprise.

`(4) Integrity of accounting and financial reporting systems of the enterprise, including independent audits and systems of internal control.

`(5) Process and adequacy of reporting, disclosures, and communications to shareholders, investors, and potential investors.

`(6) Extensions of credit to board members and executive officers.

`(7) Responsiveness of executive officers in providing accurate and timely reports to Federal regulators and in addressing the supervisory concerns of Federal regulators in a timely and appropriate manner.

`(f) Prohibition of Extensions of Credit- An enterprise may not directly or indirectly, including through any subsidiary, extend or maintain credit, arrange for the extension of credit, or renew an extension of credit, in the form of a personal loan to or for any board member or executive officer of the enterprise, as provided by section 13(k) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(k)).

`(g) Certification of Disclosures- The chief executive officer and the chief financial officer of an enterprise shall review each quarterly report and annual report issued by the enterprise and such reports shall include certifications by such officers as required by section 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241).

`(h) Change of Audit Partner- An enterprise may not accept audit services from an external auditing firm if the lead or coordinating audit partner who has primary responsibility for the external audit of the enterprise, or the external audit partner who has responsibility for reviewing the external audit has performed audit services for the enterprise in each of the five previous fiscal years.

`(i) Compliance Program-

`(1) REQUIREMENT- Each enterprise shall establish and maintain a compliance program that is reasonably designed to assure that the enterprise complies with applicable laws, rules, regulations, and internal controls.

`(2) COMPLIANCE OFFICER- The compliance program of an enterprise shall be headed by a compliance officer, however styled, who reports directly to the chief executive officer of the enterprise. The compliance officer shall report regularly to the board of directors or an appropriate committee of the board of directors on compliance with and the adequacy of current compliance policies and procedures of the enterprise, and shall recommend any adjustments to such policies and procedures that the compliance officer considers necessary and appropriate.

`(j) Risk Management Program-

`(1) REQUIREMENT- Each enterprise shall establish and maintain a risk management program that is reasonably designed to manage the risks of the operations of the enterprise.

`(2) RISK MANAGEMENT OFFICER- The risk management program of an enterprise shall be headed by a risk management officer, however styled, who reports directly to the chief executive officer of the enterprise. The risk management officer shall report regularly to the board of directors or an appropriate committee of the board of directors on compliance with and the adequacy of current risk management policies and procedures of the enterprise, and shall recommend any adjustments to such policies and procedures that the risk management officer considers necessary and appropriate.

`(k) Compliance With Other Laws-

`(1) DEREGISTERED OR UNREGISTERED COMMON STOCK- If an enterprise deregisters or has not registered its common stock with the Securities and Exchange Commission under the Securities Exchange Act of 1934, the enterprise shall comply or continue to comply with sections 10A(m) and 13(k) of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(m), 78m(k)) and sections 302, 304, and 406 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 7243, 7264), subject to such requirements as provided by subsection (l) of this section.

`(2) REGISTERED COMMON STOCK- An enterprise that has its common stock registered with the Securities and Exchange Commission shall maintain such registered status, unless it provides 60 days prior written notice to the Director stating its intent to deregister and its understanding that it will remain subject to the requirements of the sections of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, subject to such requirements as provided by subsection (l) of this section.

`(l) Other Matters- The Director may from time to time establish standards, by regulation, order, or guideline, regarding such other corporate governance matters of the enterprises as the Director considers appropriate.

`(m) Modification of Standards- In connection with standards of Federal or State law (including the Revised Model Corporation Act) or New York Stock Exchange rules that are made applicable to an enterprise by section 1710.10 of the Director's rules (12 C.F.R. 1710.10) and by subsections (a), (b), (g), (i), (j), and (k) of this section, the Director, in the Director's sole discretion, may modify the standards contained in this section or in part 1710 of the Director's rules (12 U.S.C. Part 1710) in accordance with section 553 of title 5, United States Code, and upon written notice to the enterprise.'.

SEC. 115. REQUIRED REGISTRATION UNDER SECURITIES EXCHANGE ACT OF 1934.

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

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

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

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

SEC. 116. FINANCIAL INSTITUTIONS EXAMINATION COUNCIL.

The Federal Financial Institutions Examination Council Act of 1978 is amended--

(1) in section 1003 (12 U.S.C. 3302)--

(A) in paragraph (1), by inserting `Director of the Federal Housing Finance Agency,' after `Supervision,'; and

(B) in paragraph (3), by striking `or a credit union;' and inserting `a credit union, or a regulated entity (as such term is defined in section 1303 of the Housing and Community Development Act of 1992 (12 U.S.C. 4502)).';

(2) in section 1004 (12 U.S.C. 3303)--

(A) in paragraph (4), by inserting a semicolon at the end;

(B) by redesignating paragraph (5) as paragraph (6); and

`(5) the Director of the Federal Housing Finance Agency; and'; and

(3) in section 1006(d) (12 U.S.C. 3305(d)), by striking `and employees of the Federal Housing Finance Board'.

SEC. 117. GUARANTEE FEE STUDY.

(a) In General- The Comptroller General of the United States, in consultation with the heads of the federal banking agencies and the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development, shall, not later than one year after the date of the enactment of this Act, submit to the Congress a study concerning the pricing, transparency and reporting of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal home loan banks with regard to guarantee fees and concerning analogous practices, transparency and reporting requirements (including advances pricing practices by the Federal Home Loan Banks) of other participants in the business of mortgage purchases and securitization.

(b) Factors- The study required by this section shall examine various factors such as credit risk, counterparty risk considerations, economic value considerations, and volume considerations used by the regulated entities (as such term is defined in section 1303 of the Housing and Community Development Act of 1992) included in the study in setting the amount of fees they charge.

(1) the factors used by each enterprise (as such term is defined in section 1303 of the Housing and Community Development Act of 1992) in determining the amount of the guarantee fees it charges;

(2) the total revenue the enterprises earn from guarantee fees;

(3) the total costs incurred by the enterprises for providing guarantees;

(4) the average guarantee fee charged by the enterprises;

(5) an analysis of how and why the guarantee fees charged differ from such fees charged during the previous year;

(6) a breakdown of the revenue and costs associated with providing guarantees, based on product type and risk classifications; and

(7) other relevant information on guarantee fees with other participants in the mortgage and securitization business.

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

(e) Effective Date- This section shall take effect on the date of the enactment of this Act.

SEC. 118. CONFORMING AMENDMENTS.

(a) 1992 ACT- Part 1 of subtitle A of title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4511 et seq.), as amended by the preceding provisions of this Act, is further amended--

(1) by striking `an enterprise' each place such term appears in such part (except in sections 1313(a)(2)(A), 1313A(b)(2)(B)(ii)(I), and 1316(b)(3)) and inserting `a regulated entity';

(2) by striking `the enterprise' each place such term appears in such part (except in section 1316(b)(3)) and inserting `the regulated entity';

(3) by striking `the enterprises' each place such term appears in such part (except in sections 1312(c)(2), 1312(e)(2), and 1319B(a)(4)(D)) and inserting `the regulated entities';