110th CONGRESS
1st Session
H. R. 1427
To reform the regulation of certain housing-related Government-sponsored
enterprises, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
March 9, 2007
Mr. FRANK of Massachusetts (for himself, Mr. WATT, Mr. BAKER, and Mr. GARY
G. MILLER of California) 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 `Federal Housing Finance Reform
Act of 2007'.
(b) Table of Contents- The table of contents for this Act is as follows:
Sec. 1. Short title and table of contents.
TITLE I--REFORM OF REGULATION OF ENTERPRISES AND FEDERAL HOME LOAN BANKS
Subtitle A--Improvement of Safety and Soundness
Sec. 101. Establishment of the Federal Housing Finance Agency.
Sec. 102. Duties and authorities of Director.
Sec. 103. Federal Housing Enterprise Board.
Sec. 104. Authority to require reports by regulated entities.
Sec. 105. Disclosure of charitable contributions by Enterprises.
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 product approval and housing goal oversight.
Sec. 122. Review of enterprise products.
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. 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. 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 agent for, a regulated entity,
or controlling shareholder of an enterprise;
`(B) any shareholder, affiliate, consultant, or joint venture partner
of a regulated entity, and any other person, as determined by the Director
(by regulation or on a case-by-case basis) that participates in the
conduct of the affairs of a regulated entity, except that a shareholder
of a regulated entity shall not be considered to have participated in
the affairs of that regulated entity solely by reason of being a member
or customer of the regulated entity;
`(C) any independent contractor for a regulated entity (including any
attorney, appraiser, or accountant), if--
`(i) the independent contractor knowingly or recklessly participates
in--
`(I) any violation of any law or regulation;
`(II) any breach of fiduciary duty; or
`(III) any unsafe or unsound practice; and
`(ii) such violation, breach, or practice caused, or is likely to
cause, more than a minimal financial loss to, or a significant adverse
effect on, the regulated entity; and'.
`(D) any not-for-profit corporation that receives its principal funding,
on an ongoing basis, from any regulated entity.';
(8) by redesignating paragraphs (8) through (13) as paragraphs (12) through
(17), respectively; and
(9) by inserting after paragraph (7) the following new paragraph:
`(11) FEDERAL HOME LOAN BANK- The term `Federal home loan bank' means
a bank established under the authority of the Federal Home Loan Bank Act.';
(10) by redesignating paragraphs (2) through (7) as paragraphs (5) through
(10), respectively; and
(11) by inserting after paragraph (1) the following new paragraphs:
`(2) AGENCY- The term `Agency' means the Federal Housing Finance Agency.
`(3) AUTHORIZING STATUTES- The term `authorizing statutes' means--
`(A) the Federal National Mortgage Association Charter Act;
`(B) the Federal Home Loan Mortgage Corporation Act; and
`(C) the Federal Home Loan Bank Act.
`(4) BOARD- The term `Board' means the Federal Housing Enterprise Board
established under section 1313B.'.
TITLE I--REFORM OF REGULATION OF ENTERPRISES AND FEDERAL HOME LOAN BANKS
Subtitle A--Improvement of Safety and Soundness
SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE AGENCY.
(a) In General- The Housing and Community Development Act of 1992 (12 U.S.C.
4501 et seq.) is amended by striking sections 1311 and 1312 and inserting
the following:
`SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE AGENCY.
`(a) Establishment- There is established the Federal Housing Finance Agency,
which shall be an independent agency of the Federal Government.
`(b) General Supervisory and Regulatory Authority-
`(1) IN GENERAL- Each regulated entity shall, to the extent provided in
this title, be subject to the supervision and regulation of the Agency.
`(2) AUTHORITY OVER FANNIE MAE, FREDDIE MAC, AND FEDERAL HOME LOAN BANKS-
The Director of the Federal Housing Finance Agency shall have general
supervisory and regulatory authority over each regulated entity and shall
exercise such general regulatory 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.
`(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.
`(1) PRINCIPAL DUTIES- The principal duties of the Director shall be--
`(A) to oversee the operations of each regulated entity; and
`(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-
`(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. FEDERAL HOUSING ENTERPRISE BOARD.
(a) In General- Title XIII of the Housing and Community Development Act
of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting after section 1313A,
as added by section 102 of this Act, the following new section:
`SEC. 1313B. FEDERAL HOUSING ENTERPRISE BOARD.
`(a) In General- There is established the Federal Housing Enterprise Board,
which shall advise the Director with respect to overall strategies and policies
in carrying out the duties of the Director under this title.
`(b) Limitations- The Board may not exercise any executive authority, and
the Director may not delegate to the Board any of the functions, powers,
or duties of the Director.
`(c) Composition- The Board shall be comprised of 3 members, of whom--
`(1) one member shall be the Secretary of the Treasury;
`(2) one member shall be the Secretary of Housing and Urban Development;
and
`(3) one member shall be the Director, who shall serve as the Chairperson
of the Board.
`(1) IN GENERAL- The Board shall meet upon notice by the Director, but
in no event shall the Board meet less frequently than once every 3 months.
`(2) SPECIAL MEETINGS- Either the Secretary of the Treasury or the Secretary
of Housing and Urban Development may, upon giving written notice to the
Director, require a special meeting of the Board.
`(e) Testimony- On an annual basis, the Board shall testify before Congress
regarding--
`(1) the safety and soundness of the regulated entities;
`(2) any material deficiencies in the conduct of the operations of the
regulated entities;
`(3) the overall operational status of the regulated entities;
`(4) an evaluation of the performance of the regulated entities in carrying
out their respective missions;
`(5) operations, resources, and performance of the Agency; and
`(6) such other matters relating to the Agency and its fulfillment of
its mission, as the Board determines appropriate.'.
(b) Annual Report of the Director- Section 1319B(a) of the Housing and Community
Development Act of 1992 (12 U.S.C. 4521 (a)) is amended--
(1) in paragraph (3), by striking `and' at the end; and
(2) by striking paragraph (4) and inserting the following new paragraphs:
`(4) an assessment of the Board or any of its members with respect to--
`(A) the safety and soundness of the regulated entities;
`(B) any material deficiencies in the conduct of the operations of the
regulated entities;
`(C) the overall operational status of the regulated entities; and
`(D) an evaluation of the performance of the regulated entities in carrying
out their missions;
`(5) operations, resources, and performance of the Agency; 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';
(A) in the subsection heading, by striking `Special Reports and Reports
of Financial Condition' and inserting `Regular and Special Reports';
(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).';
(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
(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 2007), and any amounts remaining from assessments on the Federal
Home Loan banks pursuant to section 18(b) of the Federal Home Loan Bank
Act (12 U.S.C. 1438(b)), shall, upon such effective date, be treated for
purposes of this subsection as amounts received from assessments under
this section.
`(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.
`(1) IN GENERAL- The Comptroller General shall annually audit the financial
transactions of the Agency in accordance with the U.S. generally accepted
government auditing standards as may be prescribed by the Comptroller
General of the United States. The audit shall be conducted at the place
or places where accounts of the Agency are normally kept. The representatives
of the Government Accountability Office shall have access to the personnel
and to all books, accounts, documents, papers, records (including electronic
records), reports, files, and all other papers, automated data, things,
or property belonging to or under the control of or used or employed by
the Agency pertaining to its financial transactions and necessary to facilitate
the audit, and such representatives shall be afforded full facilities
for verifying transactions with the balances or securities held by depositories,
fiscal agents, and custodians. All such books, accounts, documents, records,
reports, files, papers, and property of the Agency shall remain in possession
and custody of the Agency. The Comptroller General may obtain and duplicate
any such books, accounts, documents, records, working papers, automated
data and files, or other information relevant to such audit without cost
to the Comptroller General and the Comptroller General's right of access
to such information shall be enforceable pursuant to section 716(c) of
title 31, United States Code.
`(2) REPORT- The Comptroller General shall submit to the Congress a report
of each annual audit conducted under this subsection. The report to the
Congress shall set forth the scope of the audit and shall include the
statement of assets and liabilities and surplus or deficit, the statement
of income and expenses, the statement of sources and application of funds,
and such comments and information as may be deemed necessary to inform
Congress of the financial operations and condition of the Agency, together
with such recommendations with respect thereto as the Comptroller General
may deem advisable. A copy of each report shall be furnished to the President
and to the Agency at the time submitted to the Congress.
`(3) ASSISTANCE AND COSTS- For the purpose of conducting an audit under
this subsection, the Comptroller General may, in the discretion of the
Comptroller General, employ by contract, without regard to section 5 of
title 41, United States Code, professional services of firms and organizations
of certified public accountants for temporary periods or for special purposes.
Upon the request of the Comptroller General, the Director of the Agency
shall transfer to the Government Accountability Office from funds available,
the amount requested by the Comptroller General to cover the full costs
of any audit and report conducted by the Comptroller General. The Comptroller
General shall credit funds transferred to the account established for
salaries and expenses of the Government Accountability Office, and such
amount shall be available upon receipt and without fiscal year limitation
to cover the full costs of the audit and report.'.
SEC. 107. EXAMINERS AND ACCOUNTANTS.
(a) Examinations- Section 1317 of the Housing and Community Development
Act of 1992 (12 U.S.C. 4517) is amended--
(1) in subsection (a), by adding after the period at the end the following:
`Each examination under this subsection of a regulated entity shall include
a review of the procedures required to be established and maintained by
the regulated entity pursuant to section 1314(c) (relating to fraudulent
financial transactions) and the report regarding each such examination
shall describe any problems with such procedures maintained by the regulated
entity.';
(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
(A) in the second sentence, by inserting `to conduct examinations under
this section' before the period; and
(B) in the third sentence, by striking `from amounts available in the
Federal Housing Enterprises Oversight Fund'.
(b) Enhanced Authority To Hire Examiners and Accountants- Section 1317 of
the Housing and Community Development Act of 1992 (12 U.S.C. 4517) is amended
by adding at the end the following new subsection:
`(g) Appointment of Accountants, Economists, Specialists, and Examiners-
`(1) APPLICABILITY- This section applies with respect to any position
of examiner, accountant, specialist in financial markets, specialist in
technology, and economist at the Agency, with respect to supervision and
regulation of the regulated entities, that is in the competitive service.
`(2) APPOINTMENT AUTHORITY- The Director may appoint candidates to any
position described in paragraph (1)--
`(A) in accordance with the statutes, rules, and regulations governing
appointments in the excepted service; and
`(B) notwithstanding any statutes, rules, and regulations governing
appointments in the competitive service.'.
(c) Repeal- Section 20 of the Federal Home Loan Bank Act (12 U.S.C. 1440)
is amended--
(1) in the section heading, by striking `reports' and inserting `gao audits';
(2) in the third sentence, by striking `the Board and' each place such
term appears; and
(3) by striking the first two sentences and inserting the following: `The
Federal home loan banks shall be subject to examinations by the Director
to the extent provided in section 1317 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517).'.
SEC. 108. PROHIBITION AND WITHHOLDING OF EXECUTIVE COMPENSATION.
(a) In General- Section 1318 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4518) is amended--
(1) in the section heading, by striking `of excessive' and inserting `and
withholding of executive';
(2) by redesignating subsection (b) as subsection (d); and
(3) by inserting after subsection (a) the following new subsections:
`(b) Factors- In making any determination under subsection (a), the Director
may take into consideration any factors the Director considers relevant,
including any wrongdoing on the part of the executive officer, and such
wrongdoing shall include any fraudulent act or omission, breach of trust
or fiduciary duty, violation of law, rule, regulation, order, or written
agreement, and insider abuse with respect to the regulated entity. The approval
of an agreement or contract pursuant to section 309(d)(3)(B) of the Federal
National Mortgage Association Charter Act (12 U.S.C. 1723a(d)(3)(B)) or
section 303(h)(2) of the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1452(h)(2)) shall not preclude the Director from making any subsequent
determination under subsection (a).
`(c) Withholding of Compensation- In carrying out subsection (a), the Director
may require a regulated entity to withhold any payment, transfer, or disbursement
of compensation to an executive officer, or to place such compensation in
an escrow account, during the review of the reasonableness and comparability
of compensation.'.
(b) Conforming Amendments-
(1) FANNIE MAE- Section 309(d) of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1723a(d)) is amended by adding at the end the following
new paragraph:
`(4) Notwithstanding any other provision of this section, the corporation
shall not transfer, disburse, or pay compensation to any executive officer,
or enter into an agreement with such executive officer, without the approval
of the Director, for matters being reviewed under section 1318 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4518).'.
(2) FREDDIE MAC- Section 303(h) of the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1452(h)) is amended by adding at the end the following
new paragraph:
`(4) Notwithstanding any other provision of this section, the Corporation
shall not transfer, disburse, or pay compensation to any executive officer,
or enter into an agreement with such executive officer, without the approval
of the Director, for matters being reviewed under section 1318 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4518).'.
(3) FEDERAL HOME LOAN BANKS- Section 7 of the Federal Home Loan Bank Act
(12 U.S.C. 1427) is amended by adding at the end the following new subsection:
`(l) Withholding of Compensation- Notwithstanding any other provision of
this section, a Federal home loan bank shall not transfer, disburse, or
pay compensation to any executive officer, or enter into an agreement with
such executive officer, without the approval of the Director, for matters
being reviewed under section 1318 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4518).'.
SEC. 109. REVIEWS OF REGULATED ENTITIES.
Section 1319 of the Housing and Community Development Act of 1992 (12 U.S.C.
4519) is amended--
(1) by striking the section designation and heading and inserting the
following:
`SEC. 1319. REVIEWS OF REGULATED ENTITIES.';
(2) by striking `effectively recognized' and all that follows through
`broker-dealers' and inserting the following: `that the Director considers
appropriate, including an entity that is registered under section 15 of
the Securities Exchange Act of 1934 (15 U.S.C. 78a) as a nationally registered
statistical rating organization'.
SEC. 110. 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.
`(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 on a temporary basis for such period as the Director
may provide if the Director--
`(1) makes any determination specified in subparagraphs (A) through (C)
of section 1364(c)(1);
`(2) determines that the regulated entity has violated any of the prudential
standards established pursuant to section 1313A and, as a result of such
violation, determines that an unsafe and unsound condition exists; or
`(3) determines that an unsafe and unsound condition exists, except that
a temporary increase in minimum capital imposed on a regulated entity
pursuant to this paragraph shall not remain in place for a period of more
than 6 months unless the Director makes a renewed determination of the
existence of an unsafe and unsound condition.
`(e) Authority To Establish Additional Capital and Reserve Requirements
for Particular Programs- The Director may, at any time by order or regulation,
establish such capital or reserve requirements with respect to any program
or activity of a regulated entity as the Director considers appropriate
to ensure that the regulated entity operates in a safe and sound manner,
with sufficient capital and reserves to support the risks that arise in
the operations and management of the regulated entity.'.
(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.
(a) In General- Subtitle B of title XIII of the Housing and Community Development
Act of 1992 (12 U.S.C. 4611 et seq.) is amended--
(1) by striking the subtitle designation and heading and inserting the
following:
`Subtitle B--Required Capital Levels for Regulated Entities, Special Enforcement
Powers, and Reviews of Assets and Liabilities';
(2) by adding at the end the following new section:
`SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND LIABILITIES.
`(a) In General- The Director shall, by regulation, establish standards
by which the portfolio holdings, or rate of growth of the portfolio holdings,
of the enterprises will be deemed to be consistent with the mission and
the safe and sound operations of the enterprises. In developing such standards,
the Director shall consider--
`(1) the size or growth of the mortgage market;
`(2) the need for the portfolio in maintaining liquidity or stability
of the secondary mortgage market (including the market for the mortgage-backed
securities the enterprises issue);
`(3) the need for an inventory of mortgages in connection with securitizations;
`(4) the need for the portfolio to directly support the affordable housing
mission of the enterprises;
`(5) the liquidity needs of the enterprises;
`(6) any potential risks posed by the nature of the portfolio holdings;
and
`(7) any additional factors the Director determines to be appropriate,
except that such factors shall be consistent with the purposes of this
Act and any of the authorizing statutes.
`(b) Temporary Adjustments- The Director may, by order, make temporary adjustments
to the established standards for an enterprise or both enterprises, such
as during times of economic distress or market disruption.
`(c) Authority To Require Disposition or Acquisition- The Director shall
monitor the portfolio of each enterprise. Pursuant to subsection (a) and
notwithstanding the capital classifications of the enterprises, the Director
may, by order, require an enterprise, under such terms and conditions as
the Director determines to be appropriate, to dispose of or acquire any
asset, if the Director determines that such action is consistent with the
purposes of this Act or any of the authorizing statutes.'.
(b) Regulations- Not later than the expiration of the 180-day period beginning
on the effective date under section 185, the Director of the Federal Housing
Finance Agency shall issue regulations pursuant to section 1369E(a) of the
Housing and Community Development Act of 1992 (as added by subsection (a)
of this section) establishing the portfolio holdings standards under such
section.
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.
`(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:
`(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.
`(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.
`(1) REQUIREMENT- Each enterprise shall establish and maintain a compliance
program that is reasonably designed to assure that the enterprise complies
with applicable laws, rules, regulations, and internal controls.
`(2) COMPLIANCE OFFICER- The compliance program of an enterprise shall
be headed by a compliance officer, however styled, who reports directly
to the chief executive officer of the enterprise. The compliance officer
shall report regularly to the board of directors or an appropriate committee
of the board of directors on compliance with and the adequacy of current
compliance policies and procedures of the enterprise, and shall recommend
any adjustments to such policies and procedures that the compliance officer
considers necessary and appropriate.
`(j) Risk Management Program-
`(1) REQUIREMENT- Each enterprise shall establish and maintain a risk
management program that is reasonably designed to manage the risks of
the operations of the enterprise.
`(2) RISK MANAGEMENT OFFICER- The risk management program of an enterprise
shall be headed by a risk management officer, however styled, who reports
directly to the chief executive officer of the enterprise. The risk management
officer shall report regularly to the board of directors or an appropriate
committee of the board of directors on compliance with and the adequacy
of current risk management policies and procedures of the enterprise,
and shall recommend any adjustments to such policies and procedures that
the risk management officer considers necessary and appropriate.
`(k) Compliance With Other Laws-
`(1) DEREGISTERED OR UNREGISTERED COMMON STOCK- If an enterprise deregisters
or has not registered its common stock with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, the enterprise shall
comply or continue to comply with sections 10A(m) and 13(k) of the Securities
Exchange Act of 1934 (15 U.S.C. 78j-1(m), 78m(k)) and sections 302, 304,
and 406 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 7243, 7264),
subject to such requirements as provided by subsection (l) of this section.
`(2) REGISTERED COMMON STOCK- An enterprise that has its common stock
registered with the Securities and Exchange Commission shall maintain
such registered status, unless it provides 60 days prior written notice
to the Director stating its intent to deregister and its understanding
that it will remain subject to the requirements of the sections of the
Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, subject
to such requirements as provided by subsection (l) of this section.
`(l) Other Matters- The Director may from time to time establish standards,
by regulation, order, or guideline, regarding such other corporate governance
matters of the enterprises as the Director considers appropriate.
`(m) Modification of Standards- In connection with standards of Federal
or State law (including the Revised Model Corporation Act) or New York Stock
Exchange rules that are made applicable to an enterprise by section 1710.10
of the Director's rules (12 C.F.R. 1710.10) and by subsections (a), (b),
(g), (i), (j), and (k) of this section, the Director, in the Director's
sole discretion, may modify the standards contained in this section or in
part 1710 of the Director's rules (12 U.S.C. Part 1710) in accordance with
section 553 of title 5, United States Code, and upon written notice to the
enterprise.'.
SEC. 115. REQUIRED REGISTRATION UNDER SECURITIES EXCHANGE ACT OF 1934.
The Housing and Community Development Act of 1992 is amended by adding after
section 1322A, as added by the preceding provisions of this Act, the following
new section:
`SEC. 1322B. REQUIRED REGISTRATION UNDER SECURITIES EXCHANGE ACT OF 1934.
`(a) In General- Each regulated entity shall register at least one class
of the capital stock of such regulated entity, and maintain such registration
with the Securities and Exchange Commission, under the Securities Exchange
Act of 1934.
`(b) Enterprises- Each enterprise shall comply with sections 14 and 16 of
the Securities Exchange Act of 1934.'.
SEC. 116. FINANCIAL INSTITUTIONS EXAMINATION COUNCIL.
The Federal Financial Institutions Examination Council Act of 1978 is amended--
(1) in section 1003 (12 U.S.C. 3302)--
(A) in paragraph (1), by inserting `Director of the Federal Housing
Finance Agency,' after `Supervision,'; and
(B) in paragraph (3), by striking `or a credit union;' and inserting
`a credit union, or a regulated entity (as such term is defined in section
1303 of the Housing and Community Development Act of 1992 (12 U.S.C.
4502)).';
(2) in section 1004 (12 U.S.C. 3303)--
(A) in paragraph (4), by inserting a semicolon at the end;
(B) by redesignating paragraph (5) as paragraph (6); and
(C) by inserting after paragraph (4) the following new paragraph:
`(5) the Director of the Federal Housing Finance Agency; and'; and
(3) in section 1006(d) (12 U.S.C. 3305(d)), by striking `and employees
of the Federal Housing Finance Board'.
SEC. 117. GUARANTEE FEE STUDY.
(a) In General- The Comptroller General of the United States, in consultation
with the heads of the federal banking agencies and the Director of the Office
of Federal Housing Enterprise Oversight of the Department of Housing and
Urban Development, shall, not later than one year after the date of the
enactment of this Act, submit to the Congress a study concerning the pricing,
transparency and reporting of the Federal National Mortgage Association,
the Federal Home Loan Mortgage Corporation, and the Federal home loan banks
with regard to guarantee fees and concerning analogous practices, transparency
and reporting requirements (including advances pricing practices by the
Federal Home Loan Banks) of other participants in the business of mortgage
purchases and securitization.
(b) Factors- The study required by this section shall examine various factors
such as credit risk, counterparty risk considerations, economic value considerations,
and volume considerations used by the regulated entities (as such term is
defined in section 1303 of the Housing and Community Development Act of
1992) included in the study in setting the amount of fees they charge.
(c) Contents of Report- The report required under subsection (a) shall identify
and analyze--
(1) the factors used by each enterprise (as such term is defined in section
1303 of the Housing and Community Development Act of 1992) in determining
the amount of the guarantee fees it charges;
(2) the total revenue the enterprises earn from guarantee fees;
(3) the total costs incurred by the enterprises for providing guarantees;
(4) the average guarantee fee charged by the enterprises;
(5) an analysis of how and why the guarantee fees charged differ from
such fees charged during the previous year;
(6) a breakdown of the revenue and costs associated with providing guarantees,
based on product type and risk classifications; and
(7) other relevant information on guarantee fees with other participants
in the mortgage and securitization business.
(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';
(4) by striking `each enterprise' each place such term appears in such
part and inserting `each regulated entity';
(5) by striking `Office' each place such term appears in such part (except
in sections 1312(b)(5), 1315(b), and 1316(g), and section 1317(c)) and
inserting `Agency';
(6) in section 1315 (12 U.S.C. 4515)--
(i) in the subsection heading, by striking `Office Personnel' and
inserting `In General'; and
(ii) by striking `The' and inserting `Subject to titles III and IV
of the Federal Housing Finance Reform Act of 2007, the';
(B) by striking subsections (d) and (f); and
(C) by redesignating subsection (e) as subsection (d);
(7) in section 1319A (12 U.S.C. 4520)--
(A) by striking `(a) In General- Each enterprise' and inserting `Each
regulated entity'; and
(B) by striking subsection (b);
(8) in section 1319B (12 U.S.C. 4521), by striking `Committee on Banking,
Finance and Urban Affairs' each place such term appears and inserting
`Committee on Financial Services'; and
(9) in section 1319F (12 U.S.C. 4525), striking all that follows `United
States Code' and inserting `, the Agency shall be considered an agency
responsible for the regulation or supervision of financial institutions.'.
(b) Amendments to Fannie Mae Charter Act- The Federal National Mortgage
Association Charter Act (12 U.S.C. 1716 et seq.) is amended--
(1) by striking `Director of the Office of Federal Housing Enterprise
Oversight of the Department of Housing and Urban Development' each place
such term appears, and inserting `Director of the Federal Housing Finance
Agency', in--
(A) section 303(c)(2) (12 U.S.C. 1718(c)(2));
(B) section 309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)); and
(C) section 309(k)(1); and
(A) in subsections (d)(3)(A) and (n)(1), by striking `Banking, Finance
and Urban Affairs' each place such term appears and inserting `Financial
Services'; and
(i) in paragraph (1), by striking `Secretary' the second place such
term appears and inserting `Director';
(ii) in paragraph (2), by striking `Secretary' the second place such
term appears and inserting `Director'; and
(iii) by striking `Secretary' each other place such term appears and
inserting `Director of the Federal Housing Finance Agency'; and
(C) in subsection (n), by striking `Secretary' each place such term
appears and inserting `Director of the Federal Housing Finance Agency'.
(c) Amendments to Freddie Mac Act- The Federal Home Loan Mortgage Corporation
Act is amended--
(1) by striking `Director of the Office of Federal Housing Enterprise
Oversight of the Department of Housing and Urban Development' each place
such term appears, and inserting `Director of the Federal Housing Finance
Agency', in--
(A) section 303(b)(2) (12 U.S.C. 1452(b)(2));
(B) section 303(h)(2) (12 U.S.C. 1452(h)(2)); and
(C) section 307(c)(1) (12 U.S.C. 1456(c)(1));
(2) in sections 303(h)(1) and 307(f)(1) (12 U.S.C. 1452(h)(1), 1456(f)(1)),
by striking `Banking, Finance and Urban Affairs' each place such term
appears and inserting `Financial Services';
(3) in section 306(i) (12 U.S.C. 1455(i))--
(A) by striking `1316(c)' and inserting `306(c)'; and
(B) by striking `section 106' and inserting `section 1316'; and
(4) in section 307 (12 U.S.C. 1456))--
(i) in paragraph (1), by striking `Secretary' the second place such
term appears and inserting `Director';
(ii) in paragraph (2), by striking `Secretary' the second place such
term appears and inserting `Director'; and
(iii) by striking `Secretary' each other place such term appears and
inserting `Director of the Federal Housing Finance Agency'; and
(B) in subsection (f), by striking `Secretary' each place such term
appears and inserting `Director of the Federal Housing Finance Agency'.
Subtitle B--Improvement of Mission Supervision
SEC. 121. TRANSFER OF PRODUCT APPROVAL AND HOUSING GOAL OVERSIGHT.
Part 2 of subtitle A of title XIII of the Housing and Community Development
Act of 1992 (12 U.S.C. 4541 et seq.) is amended--
(1) by striking the designation and heading for the part and inserting
the following:
`PART 2--PRODUCT APPROVAL BY DIRECTOR, CORPORATE GOVERNANCE, AND ESTABLISHMENT
OF HOUSING GOALS';
(2) by striking sections 1321 and 1322.
SEC. 122. REVIEW OF ENTERPRISE PRODUCTS.
(a) In General- Part 2 of subtitle A of title XIII of the Housing and Community
Development Act of 1992 is amended by inserting before section 1323 (12
U.S.C. 4543) the following new section:
`SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS OF ENTERPRISES.
`(a) In General- The Director shall require each enterprise to obtain the
