§ 1426. Capital structure of Federal home loan banks

Footnotes

1. 1 So in original. Probably should be “Class B stock”.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1932

   Federal Home Loan Bank Act

   Pub. L. 72–522 § 6 · 47 Stat. 725

   Enacted · 12 U.S.C. § 1426

   July 22, 1932, ch. 522, § 6, 47 Stat. 727

   Source evidence

   Code source credit
   July 22, 1932, ch. 522, § 6, 47 Stat. 727

   Enacted provision · exact public law section
   Sec. 6. capital of federal home loan banks and subscriptions thereto (a) As soon as practicable after the enactment of this Act, Minimum capital. the board, with the approval of the Secretary of the Treasury, shall determine the minimum capital of each Federal Home Loan Bank which shall be not less than $5,000,000. The board shall, as Subscriptions. soon as practicable thereafter, open books in each district established under section 3 for subscription to the capital stock of the Federal Home Loan Bank of the district. (b) The capital stock of each Federal Home Loan Bank shall be Shares of stock. divided into shares of a par value of $100 each. The minimum capital stock shall be issued at par. Stock issued thereafter shall be issued at such price not less than par as may be fixed by the board. (c) The original stock subscription for each institution eligible to Original investment. become a member under section 4 shall be an amount equal to 1 per centum of the aggregate of the unpaid principal of the subscriber’s home mortgage loans, but not less than $1,500. The board shall from Adjustments of amounts. time to time adjust the amount of stock held by each member so that, as nearly as possible, such member shall at all times have invested in the stock of the Federal Home Loan Bank at least an amount calculated in the manner provided in the preceding sentence (but not less than $1,500). If the board finds that the investment of any If stock held is greater, member’s holdings may be reduced. member in stock is greater than that required under this section, upon application of such member, the bank shall pay such member for each share of stock in excess of the amount so required an amount equal to the value of such stock, or, at the election of the bank, the whole or any part of the payments which would be so made shall be credited upon the indebtedness of the member to the bank. In Payment for canceled stock. either such event, stock equal in value to the amount of the payment or credit, or both, as the case may be, shall be surrendered and canceled. No share of stock shall be surrendered and canceled if the Restriction. Post, p. 732. effect of such surrender and cancellation would be to violate the provisions of section 10 (c) requiring the amount of stock held by such member to equal at least one-twelfth of the outstanding advances to such member. (d) Cash payment for stock subscriptions.Installment payments. Stock subscriptions other than by the United States shall be paid for in cash, and shall be paid for at the time of application therefor, or, at the election of the subscriber, in installments, but not less than one-fourth of the total amount payable shall be paid at the time of filing application, and a further sum of not less than one-fourth of such total shall have been paid at the end of each succeeding period of four months. (e) Institutions where State laws do not permit stock purchase. If the law of the State under which an institution described in section 4 operates does not permit such institution to subscribe for stock in the Federal Home Loan Bank but if such institution has Admitted to borrowing privileges on specified terms, etc. the power to borrow money and give security therefor, the board may permit such institution to obtain advances on the same terms and conditions and subject to the same limitations as members (except that such institution shall not be required, during the period during which advances may be made under this subsection, to subscribe for stock in the Federal Home Loan Bank or to deposit such stock as collateral security as required in section 10), but such institution Security required. shall be required to keep on deposit such security, in addition to home mortgages, for such advances, as the board shall determine, which shall equal in value 1 per centum of the aggregate unpaid principal of such institution’s home mortgage loans (but not less Permissive only pending State authorization. than $1,500). No advance to any such institution shall be made under authority of this subsection after the State in which the institution is organized enacts legislation authorizing such institution to subscribe for Federal Home Loan Bank stock or after the expiration of the next regular session of the legislature of such State begun Liquidation and termination if authority withheld. after the enactment of this Act, whichever is earlier. If, at the end of such time, such institution is not authorized to subscribe for stock, the bank shall proceed to liquidate the indebtedness of such institution to the bank and to terminate its relations with such institution. Limitation on advances. No advance shall be made under authority of this subsection which matures more than one year after the advance is made, but the bank may renew any such advance for yearly periods, or less, thereafter. The maturity of no advance authorized under this subsection shall be later than the time of the enactment of legislation authorizing such institution to become a member or the expiration of such session of the legislature of the State, whichever is earlier. (f) Unsubscribed portions of minimum capital to be taken over by Secretary of the Treasury. The Secretary of the Treasury shall subscribe, on behalf of the United States, for such part of the minimum capital of each Federal Home Loan Bank as is not subscribed for by members under subsection (c) of this section within thirty days after books have been opened for stock subscriptions as provided in subsection (a). Such subscriptions subject to call by board. Payments for stock subscriptions by the Secretary of the Treasury shall be subject to call in whole or in part by the board, with the approval of the Secretary of the Treasury, at such time or times as Receipts to issue; effect. may be deemed advisable. Each Federal Home Loan Bank receiving such payments shall issue receipts therefor to the Secretary of the Treasury, and such receipts shall be evidence of the stock ownership Sum for stock purchase limited. Reconstruction Finance Corporation Act, amendment. Ante, p. 5. of the United States. The aggregate amount expended by the United States for the purchase of stock under this Act shall not exceed $125,000,000. The Reconstruction Finance Corporation Act, approved January 22, 1932, is amended by adding at the end of section 2 thereof the following new paragraph: Necessary funds for payment to be furnished by corporation. “In order to enable the Secretary of the Treasury to make payments upon stock of Federal Home Loan Banks subscribed for by him in accordance with the Federal Home Loan Bank Act, the sum of $125,000,000, or so much thereof as may be necessary for such purpose, is hereby allocated and made available to the Secretary of the Treasury out of the capital of the corporation and/or the proceeds of notes, debentures, bonds, and other obligations issued by the corporation. For the purposes of this paragraph, the corporation Bonds, etc., to be issued. shall issue such notes, bonds, debentures, and other obligations as may be necessary.” (g) After the amount of capital of a Federal Home Loan Bank Capital stock held by United States. To be retired when that paid in by members is at par. paid in by members equals the amount paid in by the Secretary of the Treasury under subsection (f), such bank shall apply annually to the payment and retirement of the shares of the capital stock held by the United States, 50 per centum of all sums thereafter paid in as capital until all such capital stock held by the United States is retired at par. Stock held by the United States may at any time, in the Retirement at any time if resources permit. discretion of the Federal Home Loan Bank, and with the approval of the board, be paid off at par and retired in whole or in part; and the board may at any time require such stock to be paid off at par and retired in whole or in part if in the opinion of the board the Federal Home Loan Bank has resources available therefor: Provided, Proviso. Payment of dividends. That accumulated dividends, as provided in subsection (k), have been paid. (h) Stock subscribed for otherwise than by the United States, and Unauthorized transfers, etc. the right to the proceeds thereof, shall not be transferred or hypothecated except as hereinafter provided and the certificates therefor shall so state. (i) Any member may withdraw from membership in a Federal Withdrawals from membership. Home Loan Bank six months after filing with the board written notice of intention so to do, and the board may, after hearing, remove any member from membership, or deprive any nonmember borrower of the privilege of obtaining further advances, if, in the opinion of the board, such member or nonmember borrower has failed to comply with any provision of this Act or the regulations of the board made pursuant thereto or if, in the opinion of the board, such member or nonmember borrower is insolvent. In any such case, Indebtedness to be liquidated. the indebtedness of such member or nonmember borrower to the Federal Home Loan Bank shall be liquidated, and the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled. Upon the liquidation of such indebtedness such member or nonmember borrower shall be entitled to the return Return of collateral, etc. of its collateral, and, upon surrender and cancellation of such capital stock, the member shall receive a sum equal to its cash paid subscriptions for the capital stock surrendered, except that if at any time Exception. the board finds that the paid-in capital of a Federal Home Loan Bank is or is likely to be impaired as a result of losses in or depreciation of the assets held, the Federal Home Loan Bank shall on the order of the board withhold from the amount to be paid in retirement of the stock a pro rata share of the amount of such impairment as determined by the board. (j) A Federal Home Loan Bank may, with the approval of the Transfer of stock. board, permit the disposal of stock to another member, or to an institution eligible to become a member, but only to enable such an institution to become a member. (k) All stock of any Federal Home Loan Bank shall share in Dividends. dividend distributions without preference, except that stock subscribed for by the United States shall be entitled to dividends at Stock held by United States. a rate of 2 per centum per annum cumulative from the date of investment but in any case in which the rate of dividend is in excess of 2 per centum, the stock subscribed for by the United States, shall be entitled to dividends at a rate not in excess of that paid on other stock.

2. 1934

   Public Law not identified

   Substituted · 12 U.S.C. § 1426(c); 12 U.S.C. § 1426(e)

   Subsecs. (c), (e). Act June 27, 1934, substituted “$500” for “$1,500”

   Unresolved: No Public Law or Statutes at Large citation in the Code source.

   Source evidence

   Code amendment note
   Subsecs. (c), (e). Act June 27, 1934, substituted “$500” for “$1,500”.

3. 1935

   Public Law not identified

   Changed · 12 U.S.C. § 1426(k)

   Subsec. (k). Act May 28, 1935, omitted exception clause relating to stock held by the United States

   Unresolved: No Public Law or Statutes at Large citation in the Code source.

   Source evidence

   Code amendment note
   Subsec. (k). Act May 28, 1935, omitted exception clause relating to stock held by the United States.

4. 1950

   Public Law not identified

   Added · 12 U.S.C. § 1426(l)

   Subsec. (l). Act June 27, 1950, added subsec. (l)

   Unresolved: No Public Law or Statutes at Large citation in the Code source.

   Source evidence

   Code amendment note
   Subsec. (l). Act June 27, 1950, added subsec. (l).

5. 1955

   Public Law not identified

   1. Inserted · 12 U.S.C. § 1426(i)

      Subsec. (i). Act Aug. 11, 1955, provided that a Federal savings and loan association may not withdraw voluntarily, inserted proviso clause in item (ii)

   2. Inserted · 12 U.S.C. § 1426(i)

      Subsec. (i). Act Aug. 11, 1955, provided that a Federal savings and loan association may not withdraw voluntarily, inserted provisions authorizing removal of a member institution which has a management or home-financing policy of a character inconsistent with sound and economical home financing or with the purposes of this chapter

   Unresolved: No Public Law or Statutes at Large citation in the Code source.

   Source evidence

   Code amendment note
   Subsec. (i). Act Aug. 11, 1955, provided that a Federal savings and loan association may not withdraw voluntarily, inserted proviso clause in item (ii), and inserted provisions authorizing removal of a member institution which has a management or home-financing policy of a character inconsistent with sound and economical home financing or with the purposes of this chapter.

6. 1961

   Pub. L. 87–210 § 1 · 75 Stat. 482

   Amended · 12 U.S.C. § 1426(c)

   Pub. L. 87–210, § 1, amended subsection generally, and among other changes, authorized the bank to adjust at the end of each calendar year, under Board regulations, the stock held by each member, to retire stock of members in excess of required amounts, prohibited members to reduce stock to less than the amount held on Sept. 8, 1961, except for a reduction at any time to not less than 2 percent of its aggregate unpaid loan principal as of the beginning of the calendar year in which reduction is made, but not less than $500, or if reduced to less than 2 percent, such reduction to be in the discretion of the Board, provided that no bank shall act so as to cause the aggregate outstanding advances, within the meaning of regulations of the Board defining said term, to exceed 12 times the amounts paid in by members for outstanding capital stock held by such members, defined term “aggregate unpaid loan principal” and authorized the board to require members to submit reports and information for purposes of this subsection

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 87–210, § 1, amended subsection generally, and among other changes, authorized the bank to adjust at the end of each calendar year, under Board regulations, the stock held by each member, to retire stock of members in excess of required amounts, prohibited members to reduce stock to less than the amount held on Sept. 8, 1961, except for a reduction at any time to not less than 2 percent of its aggregate unpaid loan principal as of the beginning of the calendar year in which reduction is made, but not less than $500, or if reduced to less than 2 percent, such reduction to be in the discretion of the Board, provided that no bank shall act so as to cause the aggregate outstanding advances, within the meaning of regulations of the Board defining said term, to exceed 12 times the amounts paid in by members for outstanding capital stock held by such members, defined term “aggregate unpaid loan principal” and authorized the board to require members to submit reports and information for purposes of this subsection.

   Enacted provision · exact public law section
   (1) Each institution whose application for insurance is approved by the Corporation shall pay to the Corporation, in such manner as it shall prescribe, a premium for such insurance equal to one-twelfth of 1 per centum of the total amount of all accounts of the insured members of such institution plus any creditor obligations of such institution. Such premium shall be paid at the time the certificate’is issued by the Corporation under section 403, and thereafter 12 USC 1726. annually, except that under regulations prescribed by the Corporation such premium may be paid semiannually.

   Effective date note
   Pub. L. 87–210, § 7, Sept. 8, 1961, 75 Stat. 485, provided that: “This Act [amending this section and section 1727 of this title and enacting provisions set out as a note under section 1727 of this title] shall become effective on January 1 next following the date of its enactment [Sept. 8, 1961].”

7. 1961

   Pub. L. 87–210 § 2 · 75 Stat. 482

   Repealed · 12 U.S.C. § 1426(l)

   Pub. L. 87–210, § 2, repealed subsec. (l) which required members to acquire, hold and maintain their stock holding in an amount equal to at least 2 per centum of the aggregate of the unpaid principal of such member’s home mortgage loans, home-purchase contracts, and similar obligations, but not less than $500, and provided for the retirement of Government-owned stock

   Source evidence

   Code amendment note
   Subsec. (l). Pub. L. 87–210, § 2, repealed subsec. (l) which required members to acquire, hold and maintain their stock holding in an amount equal to at least 2 per centum of the aggregate of the unpaid principal of such member’s home mortgage loans, home-purchase contracts, and similar obligations, but not less than $500, and provided for the retirement of Government-owned stock.

   Enacted provision · exact public law section
   Sec. 2. Subsection (1) of section 6 of the Federal Home Loan Bank 64 Stat. 257. Repeal. Act, as amended, is hereby repealed.

   Effective date note
   Pub. L. 87–210, § 7, Sept. 8, 1961, 75 Stat. 485, provided that: “This Act [amending this section and section 1727 of this title and enacting provisions set out as a note under section 1727 of this title] shall become effective on January 1 next following the date of its enactment [Sept. 8, 1961].”

8. 1979

   Housing and Community Development Amendments of 1979

   Pub. L. 96–153 title III § 327 · 93 Stat. 1101

   Substituted · 12 U.S.C. § 1426(c)(2)(ii)

   Pub. L. 96–153 substituted “twenty” for “twelve”

   Source evidence

   Code amendment note
   Subsec. (c)(2)(ii). Pub. L. 96–153 substituted “twenty” for “twelve”.

   Enacted provision · exact public law section
   Sec. 327. stock to advances ratio Section 6(c)(2)(ii) of the Federal Home Loan Bank Act is 12 USC 1426. amended by striking out “twelve” and inserting in lieu thereof “twenty”.

9. 1982

   Thrift Institutions Restructuring Act

   Pub. L. 97–320 § 353 · 96 Stat. 1469

   1. Struck · 12 U.S.C. § 1426(c)(2)

      Pub. L. 97–320, § 353, struck out cl. (i) limitations which had prohibited members from reducing stock to less than the amount held on Sept. 8, 1961, except for a reduction at any time to not less than 2 percent of its aggregate unpaid loan principal as of the beginning of the calendar year in which reduction was made, but not less than $500, or if reduced to less than 2 percent, such reduction to be in the discretion of the Board; and reenacted cl. (ii) limitations as par. (2)

   2. Substituted · 12 U.S.C. § 1426(c)(2)

      Pub. L. 97–320, § 353, substituting “the Board defining such term” for “said Board defining said term”

   Source evidence

   Code amendment note
   Subsec. (c)(2). Pub. L. 97–320, § 353, struck out cl. (i) limitations which had prohibited members from reducing stock to less than the amount held on Sept. 8, 1961, except for a reduction at any time to not less than 2 percent of its aggregate unpaid loan principal as of the beginning of the calendar year in which reduction was made, but not less than $500, or if reduced to less than 2 percent, such reduction to be in the discretion of the Board; and reenacted cl. (ii) limitations as par. (2), substituting “the Board defining such term” for “said Board defining said term”.

   Enacted provision · exact public law section
   Sec. 353. deletion of obsolete requirement Section 6(c)(2) of the Federal Home Loan Bank Act (12 U.S.C. 1426(c)(2)) is amended to read as follows: “(2) Notwithstanding any other provision of this subsection, no action shall be taken by any bank with respect to any member pursuant to any of the foregoing provisions of this subsection if the effect of such action would be to cause the aggregate outstanding advances, within the meaning of the last sentence of subsection (c) of section 10 of this Act or within the meaning of regulations of the 12 USC 1230. Board defining such term for the purposes of this sentence, made by such bank to such member to exceed twenty times the amounts paid in by such member for outstanding capital stock held by such member.”.

10. 1982

    Thrift Institutions Restructuring Act

    Pub. L. 97–320 § 355(a) · 96 Stat. 1469

    Changed · 12 U.S.C. § 1426(i)

    Pub. L. 97–320, § 355(a), provided for treatment of a liquidation of indebtedness, in the case of a voluntary withdrawal of an institution from membership, as a prepayment of the indebtedness, subject to applicable prepayment penalties

    Source evidence

    Code amendment note
    Subsec. (i). Pub. L. 97–320, § 355(a), provided for treatment of a liquidation of indebtedness, in the case of a voluntary withdrawal of an institution from membership, as a prepayment of the indebtedness, subject to applicable prepayment penalties.

    Enacted provision · exact public law section
    (a) Section 6(i) of the Federal Home Loan Bank Act (12 U.S.C. 1426(i)) is amended by inserting before the period at the end of the second sentence the following: “, except that in the case of a voluntary withdrawal, such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties applicable to such prepayment”.

11. 1982

    Thrift Institutions Restructuring Act

    Pub. L. 97–320 § 355(b) · 96 Stat. 1469

    Added · 12 U.S.C. § 1426(m)

    Pub. L. 97–320, § 355(b), added subsec. (m)

    Source evidence

    Code amendment note
    Subsec. (m). Pub. L. 97–320, § 355(b), added subsec. (m).

    Enacted provision · exact public law section
    (b) Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426) is amended by adding at the end thereof the following: “(m) Notwithstanding any other provision of this Act, an institution which withdraws from membership may acquire membership in any Federal Home Loan Bank only after the expiration of a period of five years thereafter, except where such withdrawal is a consequence of a transfer of membership on a non-interrupted basis between Banks.”.

12. 1983

    Pub. L. 97–457 § 16 · 96 Stat. 2507

    Substituted · 12 U.S.C. § 1426(m)

    Pub. L. 97–457 substituted “banks or in connection with obtaining a charter from the Federal Home Loan Bank Board” for “Banks” after “between”

    Source evidence

    Code amendment note
    Subsec. (m). Pub. L. 97–457 substituted “banks or in connection with obtaining a charter from the Federal Home Loan Bank Board” for “Banks” after “between”.

    Enacted provision · exact public law section
    Sec. 16. Section 6(m) of the Federal Home Loan Bank Act (12 Ante, p. 1508. U.S.C. 1426(m)), as added by section 355(b) of Public Law 97–320, is amended by striking out “Banks” and inserting in lieu thereof “banks or in connection with obtaining a charter from the Federal Home Loan Bank Board”.

13. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 title VII · 103 Stat. 183

    1. Redesignated · 12 U.S.C. § 1426(a)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), redesignated subsec. (b) as (a)

    2. Substituted · 12 U.S.C. § 1426(a)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), substituted “Board” for “board”

    3. Struck · 12 U.S.C. § 1426(a)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), struck out former subsec. (a) which related to minimum amount of capital stock and subscription books

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), redesignated subsec. (b) as (a), substituted “Board” for “board”, and struck out former subsec. (a) which related to minimum amount of capital stock and subscription books.

    Enacted provision · exact public law
    TITLE VII— FEDERAL HOME LOAN BANK SYSTEM REFORMS Subtitle A— Federal Home Loan Bank Act Amendments SEC. 701. DEFINITIONS. (a) In General.— Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is amended— (1) by striking paragraphs (1) and (2) and inserting the following: “(1) Board.— The term ‘Board’ means the Federal Housing Finance Board established under section 2A. “(2) (A) Bank.— The term ‘Federal Home Loan Bank’ or ‘Bank’ means a bank established under the authority of the Federal Home Loan Bank Act. “(B) Bank system.— The term ‘Federal Home Loan Bank System’ means the Federal Home Loan Banks under the supervision of the Board.”; (2) in paragraph (4) by striking “(except when used in reference to the member of the Board)”; and (3) by striking paragraph (9) and adding at the end the following: “(9) Savings association.— The term ‘savings association’ has the meaning given to such term in section 3 of the Federal Deposit Insurance Act. “(10) Chairperson.— The term ‘Chairperson’ means the Chairperson of the Board. “(11) Secretary.— The term ‘Secretary’ means the Secretary of Housing and Urban Development. “(12) Insured depository institution.— The term ‘insured depository institution’ means— “(A) an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act), and “(B) except as used in sections 21A and 21B, an insured credit union (as defined in section 101 of the Federal Credit Union Act).”. (b) Change in Terms.— (1) In general— Except as otherwise specifically provided in 12 USC 1421 et seq. this title, the Federal Home Loan Bank Act is amended by striking “board” (other than in section 7) and “Federal Home Loan Bank Board” each place such terms appear and inserting “Board”. (2) Chairperson.— The Federal Home Loan Bank Act is amended by striking “Chairman” and “chairman” each place such terms appear and inserting “Chairperson” and “chairperson”. (3) Exceptions.— (A) General rule.— The amendments made by paragraph (1) shall not apply to sections 18(c), 21A, and 21B of the Federal Home Loan Bank Act. (B) Conforming amendment.— Section 18(c) of the Federal Home Loan Bank Act (12 U.S.C. 1438(c)) is amended by striking “Federal Home Loan Bank Board” and “board” each place such terms appear and inserting “Director of the Office of Thrift Supervision”. (c) Technical Amendments — Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended— (1) in subsection (e)(2)(C), by inserting “Federal Home Loan” before “Banks,”; and (2) in the first sentence of the third paragraph of subsection (i) by inserting “Federal” before “Home Loan Bank System”. SEC. 702. FEDERAL HOUSING FINANCE BOARD ESTABLISHED. (a) In General.— The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended by inserting after section 2 the following new sections: “SEC. 2A. FEDERAL HOUSING FINANCE BOARD. “(a) Establishment.— “(1) In general.— There is established the Federal Housing Finance Board, which shall succeed to the authority of the Federal Home Loan Bank Board with respect to the Federal Home Loan Banks. “(2) Status.— The Board shall be an independent agency in the executive branch of the Government. “(3) Duties.— The duties of the Board shall be— “(A) to supervise the Federal Home Loan Banks, “(B) to ensure that the Federal Home Loan Banks carry out their housing finance mission, “(C) to ensure the Federal Home Loan Banks remain adequately capitalized and able to raise funds in the capital markets, and “(D) to ensure the Federal Home Loan Banks operate in a safe and sound manner. “(b) Management.— “(1) In general.— The management of the Board shall be vested in a Board of Directors consisting of 5 directors as follows: “(A) The Secretary who shall serve without additional compensation. “(B) Four citizens of the United States, appointed by the President, by and with the advice and consent of the Senate, each of whom shall hold office for a term of 7 years. “(2) Provisions relating to appointed directors.— “(A) In general.— The directors appointed pursuant to paragraph (1)(B) shall be from among persons with extensive experience or training in housing finance or with a commitment to providing specialized housing credit. An appointed director shall not hold any other appointed office during his or her term as director. Not more than 3 directors shall be members of the same political party. Not more than 1 appointed director shall be from any single district of the Federal Home Loan Bank System. Nominations pursuant to this subparagraph shall be referred in the Senate to the Committee on Banking, Housing, and Urban Affairs. “(B) Consumer representative.— At least 1 director shall be chosen from an organization with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections. “(C) Limitations on conflicts of interest.— No director may— “(i) serve as a director or officer of any Federal Home Loan Bank or any member of any Bank; or “(ii) hold shares of, or any other financial interest in, any member of any such Bank. “(3) Initial terms.— Notwithstanding paragraph (2), of the directors first appointed— “(A) one shall be appointed for a term of 1 year; “(B) one shall be appointed for a term of 3 years; and “(C) one shall be appointed for a term of 5 years. “(c) Chairperson; Transitional Provisions.— “(1) In general.— The President shall designate 1 of the appointed directors to be the Chairperson of the Board. The Chairperson shall designate another director to serve as Acting Chairperson during the absence or disability of the Chairperson. “(2) Transitional provision.— Beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, until such time that at least 2 directors are appointed and confirmed pursuant to subsection (b), the Secretary shall act for all purposes and with the full powers of the Board of Directors. The Secretary may utilize the services of employees from the Department of Housing and Urban Development to perform services for the Board of Directors during such transition period. “(d) Vacancies.— “(1) In general.— Any vacancy on the Board of Directors shall be filled in the manner in which the original appointment was made. Any director appointed to fill a vacancy occurring before the expiration of the term for which such director’s predecessor was appointed shall be appointed only for the remainder of such term. Each director may continue to serve until a successor has been appointed and qualified. “(2) The secretary.— In the event of a vacancy in the office of Secretary or during the absence or disability of the Secretary, the Acting Secretary shall act as a director in place of the Secretary. “SEC. 2B. POWERS AND DUTIES. “(a) General Powers.— -The Board shall have the following powers: “(1) To supervise the Federal Home Loan Banks and to promulgate and enforce such regulations and orders as are necessary from time to time to carry out the provisions of this Act. “(2) To suspend or remove for cause a director, officer, employee, or agent of any Federal Home Loan Bank or joint office. The cause of such suspension or removal shall be communicated in writing to such director, officer, employee, or agent and to such Bank or joint office. Notwithstanding any other provision of this Act, no officer, employee, or agent of a Bank or joint office shall be a Federal officer or employee under any definition of either term in title 5, United States Code. “(3) To determine necessary expenditures of the Board under this Act and the manner in which such expenditures shall be incurred, allowed, and paid. “(4) To use the United States mails in the same manner and under the same conditions as a department or agency of the United States. “(b) Staff.— “(1) Board staff.— Subject to title IV of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board may employ, direct, and fix the compensation and number of employees, attorneys, and agents of the Federal Housing Finance Board, except that in no event shall the Board delegate any function to any employee, administrative unit of any Bank, or joint office of the Federal Home Loan Bank System. The prohibition contained in the preceding sentence shall not apply to the delegation of ministerial functions including issuing consolidated obligations pursuant to section 11(b). In directing and fixing such compensation, the Board shall consult with and maintain comparability with the compensation at the Federal bank regulatory agencies. Such compensation shall be paid without regard to the provisions of other laws applicable to officers or employees of the United States, except the Chairperson and other Directors shall be compensated as prescribed in sections 5314 and 5315 of title 5, United States Code, respectively. “(2) Abolition of joint offices.— The joint or collective offices of the Federal Home Loan Bank System, except for the Office of Finance, are hereby abolished. “(c) Receipts of the Board.— Receipts of the Board derived from assessments levied upon the Federal Home Loan Banks and from other sources (other than receipts from the sale of consolidated Federal Home Loan Bank bonds and debentures issued under section 11 of this Act) shall be deposited in the Treasury of the United States. Salaries of the directors and other employees of the Board and all other expenses thereof may be paid from such assessments or other sources and shall not be construed to be Government Funds or appropriated monies, or subject to apportionment for the purposes of chapter 15 of title 31, United States Code, or any other authority. “(d) Annual Report.— The Board shall make an annual report to the Congress.”. (b) Audits and Reports.— Section 20 of the Federal Home Loan Bank Act (12 U.S.C. 1440) is amended by adding at the end the following: “In addition to such examinations, the Comptroller General may audit or examine the Board and the Banks, to determine the extent to which the Board and the Banks are fairly and effectively fulfilling the purposes of this Act.”. (c) Appointment of Inspector General.— Section 8E(a)(2) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking “Federal Home Loan Bank Board,“ and inserting “Federal Housing Finance Board,”. SEC. 703. TERMINATION OF THE FEDERAL HOME LOAN BANK BOARD. (a) In General.— Section 17 of the Federal Home Loan Bank Act (12 U.S.C. 1437) is hereby repealed. SEC. 704. ELIGIBILITY FOR MEMBERSHIP. (a) Insured Depository Institutions.— Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 1424(a)) is amended to read as follows: “(a) Criteria for Eligibility.— “(1) In general.— Any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, savings bank, or any insured depository institution (as defined in section 2 of this Act), shall be eligible to become a member of a Federal Home Loan Bank if such institution— “(A) is duly organized under the laws of any State or of the United States; “(B) is subject to inspection and regulation under the banking laws, or under similar laws, of the State or of the United States; and “(C) makes such home mortgage loans as, in the judgment of the Board, are long-term loans (except that in the case of a savings bank, this subparagraph applies only if, in the judgment of the Board, its time deposits, as defined in section 19 of the Federal Reserve Act, warrant its making such loans). “(2) Qualified thrift lender.— An insured depository institution that is not a member on January 1, 1989, may become a member of a Federal Home Loan Bank only if— “(A) the insured depository institution has at least 10 percent of its total assets in residential mortgage loans; “(B) the insured depository institution’s financial condition is such that advances may be safely made to such institution; and “(C) the character of its management and its home-financing policy are consistent with sound and economical home financing. An insured depository institution commencing its initial business operations after January I, 1989, may become a member of a Federal Home Loan Bank if it complies with regulations and orders prescribed by the Board for the 10 percent asset requirement (described in the preceding sentence) within one year after the commencement of its operations.”. (c) Repeal of Section 27.— Section 27 of the Federal Home Loan Bank Act (12 U.S.C. 1447) is hereby repealed. SEC. 705. REPEAL OF PROVISION RELATING TO RATE OF INTEREST ON DEPOSITS. Section 5B of the Federal Home Loan Bank Act (12 U.S.C. 1425b) is hereby repealed. SEC. 706. CAPITAL STOCK. Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426) is amended— (1) by striking subsections (a), (e), (f), and (g) and redesignating subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), (b), (c), (d), (e), (f), (g), and (h), respectively; (2) by striking the second sentence of subsection (e) (as redesignated by paragraph (1) of this section) and inserting the following: “If any member’s membership in a Federal Home Loan Bank is terminated, the indebtedness of such member to the Federal Home Loan Bank shall be liquidated in an orderly manner (as determined by the Federal Home Loan Bank), and upon completion of such liquidation, the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled. Any such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties or other fees applicable to such prepayment.”; and (3) in subsection (h) (as redesignated by paragraph (1) of this section), by striking “charter” and all that follows through the end period and inserting “charter as a Federal savings association (as defined in section 3 of the Federal Deposit Insurance Act).”. SEC. 707. ELECTION OF BANK DIRECTORS. Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is amended— (1) in subsection (a)— (A) by striking “appointed by the Federal Home Loan Bank Board referred to in subsection (b) of section 17, hereinafter in this section referred to as the Board” and inserting “appointed by the Board referred to in section 2A”, (B) by inserting after the last sentence the following: “At least 2 of the Federal Home Loan Bank directors who are appointed by the Board shall be representatives chosen from organizations with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections. No Federal Home Loan Bank director who is appointed pursuant to this subsection may, during such Bank director’s term of office, serve as an officer of any Federal Home Loan Bank or a director or officer of any member of a Bank, or hold shares, or any other financial interest in, any member of a Bank.”; (2) by inserting after the first sentence of subsection (b) the following: “No person who is an officer or director of a member that fails to meet any applicable capital requirement is eligible to hold the office of Federal Home Loan Bank director.”; (3) by amending subsection (f) to read as follows: “(f) Vacancies.— “(1) In general.— A Bank director appointed or elected to fill a vacancy shall be appointed or elected for the unexpired term of his or her predecessor in office. “(2) Appointed bank directors.— In the event of a vacancy in any appointive Bank directorship, such vacancy shall be filled through appointment by the Board for the unexpired term. If any appointive Bank director shall cease to have the qualifications set forth in subsection (a), the office held by such person shall immediately become vacant, but such person may continue to act as a Bank director until his or her successor assumes the vacated office or the term of such office expires, whichever occurs first. “(3) Elected bank directors.— In the event of a vacancy in any elective Bank directorship, such vacancy shall be filled by an affirmative vote of a majority of the remaining Bank directors, regardless of whether such remaining Bank directors constitute a quorum of the Bank’s board of directors. A Bank director so elected shall satisfy the requirements for eligibility which were applicable to his predecessor. If any elective Bank director shall cease to have any qualification set forth in this section, the office held by such person shall immediately become vacant, and such person shall not continue to act as a Bank director.”; and (4) by adding at the end the following new subsection: “(k) Indemnification of Directors, Officers, and Employees.— The board of directors of each Bank shall determine the terms and conditions under which such Bank may indemnify its directors, officers, employees or agents.”. SEC. 708. REPEAL OF PROVISIONS RELATING TO CERTAIN POWERS OF THE FEDERAL HOME LOAN BANK BOARD. Section 19 of the Federal Home Loan Bank Act (12 U.S.C. 1439) is hereby repealed. SEC. 709. POWERS AND DUTIES OF BANKS. Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended— (1) in subsection (e)(1), by inserting “incidental to activities” after “not”; (2) in subsection (f), by striking out “or whenever in the judgment of at least 4 members of the board an emergency exists requiring such action”; (3) by amending subsection (k) to read as follows: “(k) Bank Loans to SAIF.— “(1) Loans authorized.— Subject to paragraph (3), the Federal Home Loan Banks may, upon the request of the Federal Deposit Insurance Corporation, make loans to such Corporation for the use of the Savings Association Insurance Fund. “(2) Liability of the fund.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall be a direct liability of the Savings Association Insurance Fund. “(3) Interest on and security for such loans.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall— “(A) bear a rate of interest not less than such Bank’s current marginal cost of funds, taking into account the maturities involved; and “(B) be adequately secured.”. SEC. 710. ELIGIBILITY OF BORROWERS TO SECURE ADVANCES. (a) In General.— Section 9 of the Federal Home Loan Bank Act (12 U.S.C. 1429) is amended by striking “or nonmember borrower” in the first sentence. (b) Conforming Amendments.— The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended— (1) in sections 2(5) and 4(b), by striking “or a nonmember borrower” wherever it appears; (2) in section 6(e) (as redesignated by section 706 of this Act), by striking “or nonmember borrower” wherever it appears; (3) in section 6(e) (as redesignated by section 706 of this Act), by striking “or deprive any non member borrower of the privilege of further advances,”; (4) in sections 7Q) and 10(c), by striking “or nonmember borrower” wherever it appears; (5) in section 10(c), by striking “, or made to a nonmember borrower” in the second sentence; and (6) in sections 11(g) and 11(h), by striking “or nonmember borrowers” wherever it appears. (c) Community Support.— Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) is amended by adding at the end the following: “(g) Community Support Requirements.— “(1) In general.— Before the end of the 2-year period beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board shall adopt regulations establishing standards of community investment or service for members of Banks to maintain continued access to long-term advances. “(2) Factors to be included.— The regulations promulgated pursuant to paragraph (1) shall take into account factors such as a member’s performance under the Community Reinvestment Act of 1977 and the member’s record of lending to first-time homebuyers.”. SEC. 711. ADMINISTRATIVE EXPENSES. Section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 1437(b)) is amended to read as follows: 12 USC 1438. “(b) Assessments for Administrative Expenses.— “(1) In general.— The Board may impose a semiannual assessment on the Federal Home Loan Banks, the aggregate amount of which is sufficient to provide for the payment of the Board’s estimated expenses for the period for which such assessment is made. “(2) Deficiencies.— If, at any time, amounts available from any assessment for any semiannual period are insufficient to cover the expenses of the Board incurred in carrying out the provisions of this Act during such period, the Board may make an immediate assessment against the Banks to cover the amount of the deficiency for such semiannual period. “(3) Surpluses.— If, at the end of any semiannual period for which an assessment is made, any amount remains from such assessment, such amount will be deducted from the assessment on the Banks by the Board for the following semiannual period. “(4) Transition provision.— On or after the effective date of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board may levy a one-time special assessment on the Banks pursuant to this subsection for the Board’s estimated expenses for the transitional period following enactment of such Act, if such assessment is made before the Board’s first semiannual assessment under paragraph (1).”. SEC. 712. NONADMINISTRATIVE EXPENSES. Subsection (a) of section 18 of the Federal Home Loan Bank Act (12 U.S.C. 1438(a)) and section 19A of such Act (12 U.S.C. 1439–1) are hereby repealed. SEC. 713. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION INDUSTRY ADVISORY COMMITTEE. Subsection (i) of section 21 of the Federal Home Loan Bank Act (12 U.S.C. 1441) is repealed and subsections (i), (k), and (1) are redesignated subsections (i), (j), and (k), respectively. SEC. 714. ADVANCES. (a) In General.— Subsection (a) of section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430(a)) is amended by striking everything after “members” to the end period and inserting the following “upon collateral sufficient, in the judgment of the Bank, to fully secure advances obtained from the Bank under this section or section 11(g) of this Act. All long-term advances shall only be made for the purpose of providing funds for residential housing finance. A Bank, at the time of origination or renewal of a loan or advance, shall obtain and maintain a security interest in collateral eligible pursuant to one or more of the following categories: “(1) Fully disbursed, whole first mortgages on improved residential property (not more than 90 days delinquent), or securities representing a whole interest in such mortgages. “(2) Securities issued, insured, or guaranteed by the United States Government or any agency thereof (including without limitation, mortgage-backed securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Corporation, and the Government National Mortgage Association). “(3) Deposits of a Federal Home Loan Bank. “(4) Other real estate related collateral acceptable to the Bank if such collateral has a readily ascertainable value and the Bank can perfect its interest in the collateral. The aggregate amount of outstanding advances secured by such other real estate related collateral shall not exceed 30 percent of such member’s capital. “(5) Paragraphs (1) through (4) shall not affect the ability of any Federal Home Loan Bank to take such steps as it deems necessary to protect its security position with respect to outstanding advances, including requiring deposits of additional collateral security, whether or not such additional security would be eligible to originate an advance. If an advance existing on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 matures and the member does not have sufficient eligible collateral to fully secure a renewal of such advance, a Bank may renew such advance secured by such collateral as the Bank and the Board determines is appropriate. A member that has an advance secured by such insufficient eligible collateral must reduce its level of outstanding advances promptly and prudently in accordance with a schedule determined by the Board.“. (b) Reduced Eligibility for Advances.— Section 10(e) of the Federal Home Loan Bank Act (12 U.S.C. 1430(e)) is amended to read as follows: “(e) Qualified Thrift Lender Status.— “(1) In general.— A member that is not a qualified thrift lender may only receive an advance if it holds stock in its Federal Home Loan Bank at the time it receives that advance in an amount equal to at least— “(A) 5 percent of that member’s total advances, divided by “(B) such member’s actual thrift investment percentage. Such members that are not qualified thrift lenders may only apply for advances under this section for the purpose of obtaining funds for housing finance. “(2) Priority.— The Board, by regulation, shall establish a priority for advances to members that are qualified thrift lenders. The aggregate amount of any Bank’s advances to members that are not qualified thrift lenders shall not exceed 30 percent of a Bank’s total advances. “(3) Minimum stock purchase requirement for membership.— Each member of a Federal Home Loan Bank shall, at a minimum, purchase and maintain stock in its Federal Home Loan Bank in the amount that would be required under section 6(b) if at least 30 percent of such member’s assets were home mortgage loans. “(4) Exceptions.— Paragraphs (1) and (2) of this subsection do not apply to— “(A) a savings bank as defined in section 3 of the Federal Deposit Insurance Act; or “(B) a Federal savings association in existence as a Federal savings association on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989— “(i) that was chartered as a savings bank or cooperative bank prior to October 15, 1982; or “(ii) that acquired its principal assets from an institution which was chartered prior to October 15, 1982, as a savings bank or cooperative bank under State law. “(5) Definitions.— As used in this subsection— “(A) Savings association.— The term ‘savings association’ has the same meaning as in section 10(a)(1)(A) of the Home Owners’ Loan Act. “(B) Qualified thrift lender.— The term ‘qualified thrift lender’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act. “(C) Actual thrift investment percentage.— The term ‘actual thrift investment percentage’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act.”. (c) Special Liquidity Advances.— Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as amended by section 710(c) of this Act) is amended by adding at the end the following new subsection: “(h) Special Liquidity Advances.— “(1) In general.— Subject to paragraph (2), the Federal Home Loan Banks may, upon the request of the Director of the Office of Thrift Supervision, make short-term liquidity advances to a savings association that— “(A) is solvent but presents a supervisory concern because of such association’s poor financial condition; and “(B) has reasonable and demonstrable prospects of returning to a satisfactory financial condition. “(2) Interest on and security for special liquidity advances.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall be subject to all applicable collateral requirements, including the requirements of section 10(a) of this Act, and shall be at an interest rate no less favorable than those made available for similar short-term liquidity advances to savings associations that do not present such supervisory concern.”. SEC. 715. AMENDMENTS RELATING TO WITHDRAWAL FROM FEDERAL HOME LOAN BANK MEMBERSHIP. Section 6(h) of the Federal Home Loan Bank Act (as redesignated by section 706 of this Act) is amended by striking “five” and inserting “10”. SEC. 716. REPEAL OF PROVISIONS RELATING TO LAWFUL CONTRACT RATE. Section 5 of the Federal Home Loan Bank Act (12 U.S.C. 1425) is hereby repealed. SEC. 717. BANK STOCK AND OBLIGATIONS. Section 23 of the Federal Home Loan Bank Act (12 U.S.C. 1443) is amended to read as follows: “SEC. 23. FORMS OF BANK STOCK AND OBLIGATIONS. “Any stock, debentures, bonds, notes, or other obligations issued under the authority of this Act may be issued in uncertificated form, utilizing a book entry method, or in certificated form under such rules, regulations, or guidelines as the Board of Directors of the Federal Housing Finance Board may provide.”. SEC. 718. THRIFT ADVISORY COUNCIL. Section 8a of the Federal Home Loan Bank Act (12 U.S.C. 1428a) is hereby repealed. SEC. 719. EXAMINATION OF MEMBERS. Section 22 of the Federal Home Loan Bank Act (12 U.S.C. 1442) is amended to read as follows: “SEC 22. MEMBER FINANCIAL INFORMATION. “(a) In General.— In order to enable the Federal Home Loan Banks to carry out the provisions of this Act, the Secretary of the Treasury, the Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, the Chairperson of the Federal Deposit Insurance Corporation, the Chairperson of the National Credit Union Administration, and the Director of the Office of Thrift Supervision, upon request by any Federal Home Loan Bank— “(1) shall make available in confidence to any Federal Home Loan Bank, such reports, records, or other information as may be available, relating to the condition of any member of any Federal Home Loan Bank or any institution with respect to which any such Bank has had or contemplates having transactions under this Act; and “(2) may perform through their examiners or other employees or agents, for the confidential use of the Federal Home Loan Bank, examinations of institutions for which such agency is the appropriate Federal banking regulatory agency. Reports. In addition, the Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, the Chairperson of the National Credit Union Administration, and the Director of the Office of Thrift Supervision shall make available to the Board or any Federal Home Loan Bank the financial reports filed by members of any Bank to enable the Board or a Bank to compile and publish cost of funds indices or other financial or statistical reports. “(b) Consent by Members.— Every member of a Federal Home Loan Bank shall, as a condition precedent thereto, be deemed— “(1) to consent to such examinations as the Bank or the Board may require for the purposes of this Act; “(2) to agree that reports of examinations by local. State, or Federal agencies or institutions may be furnished by such authorities to the Bank or the Board upon request; and “(3) to agree to give the Bank or the Federal agency, upon request, such information as they may need to compile and publish cost of funds indices and to publish other reports or statistical summaries pertaining to the activities of Bank members.”. SEC. 720. LIQUIDITY. Section 5A of the Federal Home Loan Bank Act (12 U.S.C. 1425a) is hereby repealed. SEC. 721. AFFORDABLE HOUSING. Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as amended by section 710 and section 714 of this Act) is amended by adding at the end the following: “(i) Community Investment Program.— “(1) In general.— Each Bank shall establish a program to provide funding for members to undertake community-oriented mortgage lending. Each Bank shall designate a community investment officer to implement community lending and affordable housing advance programs of the Banks under this subsection and subsection (j) and provide technical assistance and outreach to promote such programs. Advances under this program shall be priced at the cost of consolidated Federal Home Loan Bank obligations of comparable maturities, taking into account reasonable administrative costs. “(2) Communityoriented mortgage lending.— For purposes of this subsection, the term ‘community-oriented mortgage lending’ means providing loans— “(A) to finance home purchases by families whose income does not exceed 115 percent of the median income for the area, “(B) to finance purchase or rehabilitation of housing for occupancy by families whose income does not exceed 115 percent of median income for the area, “(C) to finance commercial and economic development activities that benefit low- and moderate-income families or activities that are located in low- and moderate-income neighborhoods, and “(D) to finance projects that further a combination of the purposes described in subparagraphs (A) through (C). “(j) Affordable Housing Program.— “(1) In general.— Pursuant to regulations promulgated by the Board, each Bank shall establish an Affordable Housing Program to subsidize the interest rate on advances to members engaged in lending for long term, low- and moderate-income, owner-occupied and affordable rental housing at subsidized interest rates. “(2) Standards.— The Board’s regulations shall permit Bank members to use subsidized advances received from the Banks to— “(A) finance homeownership by families with incomes at or below 80 percent of the median income for the area; or “(B) finance the purchase, construction, or rehabilitation of rental housing, at least 20 percent of the units of which will be occupied by and affordable for very low-income households for the remaining useful life of such housing or the mortgage term. “(3) Priorities for making advances.— In using advances authorized under paragraph (1), each Bank member shall give prior it y to qualified projects such as the following: “(A) purchase of homes by families whose income is 80 percent or less of the median income for the area, “(B) purchase or rehabilitation of housing owned or held by the United States Government or any agency or instrumentality of the United States; and “(C) purchase or rehabilitation of housing sponsored by any nonprofit organization, any State or political subdivision of any State, any local housing authority or State housing finance agency. “(4) Report.— Each member receiving advances under this program shall report annually to the Bank making such advances concerning the member’s use of advances received under this program. “(5) Contribution to program.— Each Bank shall annually contribute the percentage of its annual net earnings prescribed in the following subparagraphs to support subsidized advances through the Affordable Housing Program: “(A) In 1990, 1991, 1992, and 1993, 5 percent of the preceding year’s net income, or such prorated sums as may e required to assure that the aggregate contribution of all the Banks shall not be less than $50,000,000 for each such year. “(B) In 1994, 6 percent of the preceding year’s net income, or such prorated sum as may be required to assure that the aggregate contribution of the Banks shall not be less than $75,000,000 for such year. “(C) In 1995, and subsequent years, 10 percent of the preceding year’s net income, or such prorated sums as may be required to assure that the aggregate contribution of the Banks shall not be less than $100,000,000 for each such year. “(6) Grounds for Suspending Contributions — “(A) In general.— If a Bank finds that the payments required under this paragraph are contributing to the financial instability of such Bank, it may apply to the Federal Housing Finance Board for a temporary suspension of such payments. “(B) Financial instability.— In determining the financial instability of a Bank, the Federal Housing Finance Board shall consider such factors as (i) whether the Bank’s earnings are severely depressed, (ii) whether there has been a substantial decline in membership capital, and (iii) whether there has been a substantial reduction in advances outstanding. “(C) Review.— The Board shall review the application and any supporting financial data and issue a written decision approving or disapproving such application. The Board’s decision shall be accompanied by specific findings and reasons for its action. “(D) Monitoring suspension.— If the Board grants a suspension, it shall specify the period of time such suspension shall remain in effect and shall continue to monitor the Bank’s financial condition during such suspension. “(E) Limitations on grounds for suspension.— The Board shall not suspend payments to the Affordable Housing Program if the Bank’s reduction in earnings is a result of (i) a change in the terms for advances to members which is not justified by market conditions, (ii) inordinate operating and administrative expenses, or (iii) mismanagement. “(F) The Federal Housing Finance Board shall notify the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate not less than 60 days before such suspension takes effect. Such suspension shall become effective unless a joint resolution is enacted disapproving such suspension. “(7) Failure to use amounts for affordable housing.— If any Bank fails to utilize or commit the full amount provided in this subsection in any year, 90 percent of the amount that has not been utilized or committed in that year shall be deposited by the Bank in an Affordable Housing Reserve Fund administered by the Board. The 10 percent of the unutilized and uncommitted amount retained by a Bank should be fully utilized or committed by that Bank during the following year and any remaining portion must be deposited in the Affordable Housing Reserve Fund. Under regulations established by the Board, funds from the Affordable Housing Reserve Fund may be made available to any Bank to meet additional affordable housing needs in such Bank’s district pursuant to this section. “(8) Net earnings.— The net earnings of any Federal Home Loan Bank shall be determined for purposes of this paragraph— “(A) after reduction for any payment required under section 21 or 21B of this Act; and “(B) before declaring any dividend under section 16. “(9) Regulations.— The Federal Housing Finance Board shall promulgate regulations to implement this subsection. Such regulations shall, at a minimum— “(A) specify activities eligible to receive subsidized advances from the Banks under this program; “(B) specify priorities for the use of such advances; “(C) ensure that advances made under this program will be used only to assist projects for which adequate Long-term monitoring is available to guarantee that affordability standards and other requirements of this subsection are satisfied; “(D) ensure that a preponderance of assistance provided under this subsection is ultimately received by low- and moderate-income households; “(E) ensure that subsidies provided by Banks to member institutions under this program are passed on to the ultimate borrower; “(F) establish uniform standards for subsidized advances under this program and subsidized lending by member institutions supported by such advances, including maximum subsidy and risk limitations for different categories of loans made under this subsection; and “(G) coordinate activities under this subsection with other Federal or federally-subsidized affordable housing activities to the maximum extent possible. “(10) Other programs.— No provision of this subsection or subsection (i) shall preclude any Bank from establishing additional community investment cash advance programs or contributing additional sums to the Affordable Housing Reserve Fund. “(11) Advisory council.— Each Bank shall appoint an Advisory Council of 7 to 15 persons drawn from community and nonprofit organizations actively involved in providing or promoting low- and moderate-income housing in its district. The Advisory Council shall meet with representatives of the board of directors of the Bank quarterly to advise the Bank on low- and moderate-income housing programs and needs in the district and on the utilization of the advances for these purposes. Each Advisory Council established under this paragraph shall submit to the Board at least annually its analysis of the low-income housing activity of the Bank by which it is appointed. “(12) Reports to congress.— “(A) The Board shall monitor and report annually to the Congress and the Advisory Council for each Bank the support of low-income housing and community development by the Banks and the utilization of advances for these purposes. “(B) The analyses submitted by the Advisory Councils to the Board under paragraph (11) shall be included as part of the report required by this paragraph. “(C) The Comptroller General of the United States shall audit and evaluate the Affordable Housing Program established by this subsection after such program has been operating for 2 years. The Comptroller General shall report to Congress on the conclusions of the audit and recommend improvements or modifications to the program. “(13) Definitions.— For purposes of this subsection— “(A) Low- or moderate-income household.— The term ‘low- or moderate-income household’ means any household which has an income of 80 percent or less of the area median. “(B) Very low-income household.— The term ‘very low-income household’ means any household that has an income of 50 percent or less of the area median. “(C) low- or moderate-income neighborhood.— The term ‘low- or moderate-income neighborhood’ means any neighborhood in which 51 percent or more of the households are low- or moderate-income households. “(D) Affordable for very-low income households.— For purposes of paragraph (2)(B) the term ‘affordable for very-low income households’ means that rents charged to tenants for unite made available for occupancy by low-income families shall not exceed 30 percent of the adjusted income of a family whose income equals 50 percent of the income for the area (as determined by the Secretary of Housing and Urban Development) with adjustment for family size.”. SEC. 722. TRANSFERRED EMPLOYEES OF FEDERAL HOME LOAN RANKS AND JOINT OFFICES. (a) In General.— Each employee of the Federal Home Loan Banks or joint offices of such Banks performing a function identified for transfer under section 403 of this Act, including employees who otherwise would be ineligible for employment by the United States because of their citizenship, shall be transferred for employment not later than 60 days after the date of the enactment of this Act. (b) Notice to Employees.— Transferring employees shall receive notice of their position assignments not later than 120 days after the effective date of their transfer. (c) Guaranteed Position.— Each transferred employee shall be guaranteed a position with the same status and tenure as that held by such employee on the day immediately preceding the transfer. Each such employee holding a permanent position shall not be involuntarily separated for one year after the date of transfer, except for cause. (d) Pay and Benefits.— Each employee transferred under this section shall be entitled to receive, during the one-year period immediately following the transfer, pay and benefits comparable to those received by such employee immediately preceding the transfer. Where necessary or appropriate to further the safety and soundness of the thrift industry, the employing agency may continue the pre-transfer compensation of any transferring employee for up to 2 years beyond the expiration of the period provided for under the preceding sentence. Such pay and benefits shall be subject to the comparability provisions of this Act. Any transferred employee who suffers a reduction of pay or benefits as a result of such comparability provisions shall be compensated for such reduction during the 1 year period following the transfer by assessments from the Federal Home Loan Bank or joint office of such Banks, from which the employee transferred. In any event, this subsection shall only apply to a transferred employee while such employee remains with the agency to which the employee is transferred. (e) Health Insurance.— If the health insurance program of a transferred employee is not continued by the agency to which the employee is transferred, such employee may elect to participate in the agency’s health insurance program notwithstanding health conditions preexisting at the time of election or enrollment into an alternate health insurance program of the agency to which he or she is transferred and without regard to any other regularly scheduled open season. Such election shall be made within 30 days of the transfer. (f) Equitable Treatment.— The Director of the Office of Thrift Supervision or the Chairperson of the Federal Housing Finance Board shall take such action as is necessary on a case-by-case basis so that employees transferring under this section receive equitable treatment regarding credit for prior service with a Federal entity or instrumentality, or with a Federal Home Loan Bank or joint office of such Banks, with respect to the transferring employees’ retirement accounts and the transferring employees’ accrued leave or vacation time, in recognition of the transferring employees’ supervisory service. (g) Special Rule for Certain Annuitants.— An individual who was a reemployed annuitant on July 26, 1989, and who is transferred under this section, shall not be subject to the deduction from pay required by section 8344 or 8468 of title 5, United States Code, during the 1-year period beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. SEC. 723. TRANSITIONAL PROVISIONS. (a) Federal Home Loan Banks’ Share of Administrative Expenses.— The Federal Home Loan Banks shall pay to the Director of the Office of Thrift Supervision the amount obtained by multiplying the administrative expenses of the Office of Thrift Supervision incurred in connection with functions of the Banks that are trans-ferred to the Office (less any fees or assessments collected by the Office) by a fraction— (1) the numerator of which is the amount of such expenses of the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation paid by the Banks during the 1-year period ending on the date of enactment of this Act; and (2) the denominator of which is the total expenses of such Board and Corporation during such period. No payment under this subsection is required after December 31, 1989. (b) Compensation of Supervisory and Examinations Employees.— The Federal Home Loan Banks shall continue to pay the compensation of employees of the Federal Home Loan Banks or the joint offices of such banks who, on the day before the date of the enactment of this Act, are performing supervisory and examination functions until such supervisory and examination functions are transferred under this Act. Thereafter, the obligation of the Federal Home Loan Banks hereunder to pay such applicable compensation shall continue until the later of— (1) the date which is 120 days after the date of transfer of such supervisory and examination functions to the Office of Thrift Supervision, or (2) March 31, 1990. Payment of such compensation by the Federal Home Loan Banks shall be in lieu of, and not in addition to, the payment of compensation by the Office of Thrift Supervision. (c) Facilities and Support Services.— Until December 31, 1990, the Federal Home Loan Banks, as necessary, shall (with respect to supervisory and examination functions performed by employees transferred from the Federal Home Loan Banks or joint offices of such Banks to the Office of Thrift Supervision), provide the Office of Thrift Supervision facilities and support services comparable to those presently provided for the employees of the Federal Home Loan Banks or joint offices of such Banks performing such supervisory and examination functions, including office space, furniture and equipment, computer, personnel, and other support services. With respect to supervisory and examination functions presently performed by employees of individual Federal Home Loan Banks, each such Bank will only be required to provide such facilities and support services to the extent that the functions continue to be performed in that Bank’s offices. (d) Principal Supervisory Agent.— Beginning on the date of enactment of this Act until the Director of the Office of Thrift Supervision shall otherwise provide, the Principal Supervisory Agent for each Federal Home Loan Bank district shall be the senior supervisory official (other than the President of the Federal Home Loan Bank) employed by the Federal Home Loan Bank in such district on the day before the date of the enactment of this Act, and such employees performing supervisory and examination functions shall continue to be responsible for the supervision and examination of savings associations within such district. SEC. 724. FEDERAL HOME LOAN BANK RESERVES. (a) In General.— Section 16(a) of the Federal Home Loan Bank Act (12 U.S.C. 1436(a)) is amended— (1) by striking the first three sentences and inserting in lieu thereof: “Each Federal Home Loan Bank may carry to a reserve account from time-to-time such portion of its net earnings as may be determined by its board of directors.”; and (2) by striking the fifth sentence and inserting the following: “No dividends shall be paid except out of net earnings remaining after reductions for all reserves, chargeoffs, purchases of capital certificates of the Financing Corporation, and payments relating to the Funding Corporation required under this Act have been provided for, other than chargeoffs or expenses incurred by a Bank in connection with the purchase of capital stock of the Financing Corporation under section 21 or payments relating to the Funding Corporation Principal Fund under section 21B(e), and then only with the approval of the Federal Housing Finance Board. Beginning on January 1, 1992, Effective date. the preceding sentence shall be applied by substituting ‘previously retained earnings or current net earnings’ for ‘net earnings’.”. (b) Effective Date.— The amendment made by subsection (a)(1) 12 USC 1436 note. shall take effect on January 1, 1992. SEC. 725. SPECIAL ACCOUNT. At the time of dissolution of the Federal Home Loan Bank Board, all such moneys and funds as shall remain in the special deposit account of the Federal Home Loan Bank Board, or other such accounts, shall become the property of the Federal Housing Finance Board. Subtitle B— Federal Home Loan Mortgage Corporation SEC. 731. FEDERAL HOME LOAN MORTGAGE CORPORATION. (a) Statement of Purpose.— (1) In general.— Section 301 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 note) is amended— (A) by inserting “(a)” after the section designation; and (B) by adding at the end the following new subsection: “(b) It is the purpose of the Federal Home Loan Mortgage Corporation— “(1) to provide stability in the secondary market for home mortgages; “(2) to respond appropriately to the private capital market; and “(3) to provide ongoing assistance to the secondary market for home mortgages (including mortgages securing housing for low- and moderate-income families involving a reasonable economic return to the Corporation) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for home mortgage financing.”. (2) Conforming amendment.— The section heading for section 301 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 note) is amended to read as follows: (b) Board of Directors.— (1) New board.— Section 303(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(a)) is amended to read as follows: “(a) (1) There is hereby created the Federal Home Loan Mortgage Corporation, which shall be a body corporate under the direction of a Board of Directors. Within the limitations of law and regulation, the Board of Directors shall determine the general policies that District of Columbia. govern the operations of the Corporation, The principal office of the Corporation shall be in the District of Columbia or at any other place determined by the Corporation. “(2) (A) The Board of Directors of the Corporation shall consist of 18 persons, 5 of whom shall be appointed annually by the President of the United States and the remainder of whom shall be elected annually by the voting common stockholders. The Board of Directors shall at all times have as members appointed by the President of the United States at least 1 person from the homebuilding industry, at least 1 person from the mortgage lending industry, and at least 1 person from the real estate industry. “(B) Each member of the Board of Directors shall be such or elected for a term ending on the date of the next annual meeting of the voting common stockholders. “(C) Any appointive seat on the Board of Directors that becomes vacant shall be filled by appointment by the President of the United States, but only for the unexpired portion of the term. Any elective seat on the Board of Directors that becomes vacant after the annual election of the directors shall be filled by the Board of Directors, but only for the unexpired portion of the term. “(D) Any member of the Board of Directors who is a full-time officer or employee of the Federal Government shall not, as such member, receive compensation for services as such a member.”. (2) Transitional provisions.— (A) Interim board.— (i) Establishment.— There shall be an interim Board of Directors of the Federal Home Loan Mortgage Corporation, which shall serve from the date of the enactment of this Act until the date of the 1st meeting of the voting common shareholders of the Corporation at which the first election of the directors elected by the shareholders occurs. (ii) Members.— The interim Board of Directors of the Federal Home Loan Mortgage Corporation shall consist of— (I) the President of the Corporation; and (II) the persons who were (on the day before the date of the enactment of this Act) the Chairman of the Federal Home Loan Bank Board and the Secretary of Housing and Urban Development (or their designees). (iii) Quorum.— A quorum of the interim Board of Directors of the Federal Home Loan Mortgage Corporation shall consist of a majority of the directors duly serving from time to time. (B) Election of permanent directors.— The first meeting of the voting common shareholders of the Federal Home Loan Mortgage Corporation for election of directors shall occur, under procedures established by the Corporation, within 6 months after the date of the enactment of this Act. (c) Regulatory Power.— Section 303 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452) is amended— (1) by redesignating subsections (b) through (D as subsections (c) through (g), respectively; and (2) by inserting after subsection (a) the following new subsection: “(b) (1) The Secretary of Housing and Urban Development shall have general regulatory power over the Corporation and shall make such rules and regulations as shall be necessary and proper to ensure that the purposes of this title are accomplished. “(2) The Secretary of Housing and Urban Development may require Disadvantaged persons. that a reasonable portion of the mortgage purchases of the Corporation be related to the national goal of providing adequate housing for low- and moderate-income families, but with reasonable economic return to the Corporation. “(3) The aggregate amount of cash dividends paid by the Corporation in any fiscal year on account of any share of its common stock shall not exceed any rate that may be determined from time to time by the Secretary of Housing and Urban Development to be a fair rate of return after consideration of the current earnings and capital condition of the Corporation. “(4) The Secretary of Housing and Urban Development may examine and audit the books and financial transactions of the Corporation and may require the Corporation to issue any reports on its activities that the Secretary determines to be advisable. The Secretary Reports. shall, not later than June 30 of each year, submit to the Congress a report describing the activities of the Corporation under this Act. “(5) The aggregate amount of notes, debentures, or substantially identical types of unsecured obligations outstanding at any time shall not exceed the amount which is 15 times the sum of the Corporation’s capital, capital surplus, general surplus, reserves, and undistributed earnings unless a greater ratio shall be fixed at any time or from time to time by the Secretary of Housing and Urban Development. The outstanding total principal amount of any obligations of the Corporation which are entirely subordinated to the general debt obligations of the Corporation shall be deemed to be capital of the Corporation for the purpose of determining the aggregate amount of notes, debentures, or substantially identical types of unsecured obligations outstanding at any time. “(6) All issuances of stock, and debt obligations convertible into stock, by the Corporation shall be made only with the approval of the Secretary of Housing and Urban Development. “(7) (A) The exercise of the authority of the Corporation pursuant to commitments or otherwise to purchase, service, sell, lend on the security of, or otherwise deal in conventional residential mortgages under section 305(a) shall be subject to the approval of the Secretary of Housing and Urban Development. “(B) Any conventional mortgage programs or activities with respect to purchasing, servicing, selling, lending on the security of, or otherwise dealing in mortgages in which the Corporation has engaged or is engaging as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of Housing and Urban Development as required by this paragraph. “(8) If the Corporation submits to the Secretary of Housing and Reports. Urban Development a request for approval or other action under this title, the Secretary shall, not later than the expiration of the 45-day period following the submission of the request, approve the request or transmit to the Congress a report explaining why the request has not been approved. The period may be extended for an additional 15-day period if the Secretary requests additional information from the Corporation, but the 45-day period may not be extended for any other reason or for any period in addition to or other than the 15-day period. If the Secretary fails to transmit the report to the Congress within the 45-day period or 60-day period, as the case may be, the Corporation may proceed as if the request had been approved.”. (d) Common Stock.— (1) In general.— Section 304(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(a)) is amended to read as follows: “(a) (1) The common stock of the Corporation shall consist of— “(A) non voting common stock, which shall be issued only to Federal home loan banks; and “(B) voting common stock, which shall be issued to such holders in the manner and amount, and subject to any limitations on concentration of ownership, as may be established by the Corporation. “(2) The nonvoting common stock and the voting common stock shall have such par value and other characteristics as the Corporation provides. The voting common stock shall be vested with all voting rights, each share Being entitled to 1 vote. The free transfer-ability of the voting common stock at all times to any person, firm, corporation or other entity shall not be restricted except that, as to the Corporation, it shall be transferable only on the books of the Corporation. Nonvoting common stock of the Corporation shall be evidenced in the manner and shall be transferable only to the extent, to the transferees, and in the manner, provided by the Corporation.”. (2) Conversion of stock.— On the date of the enactment of this Act, each share of outstanding senior participating preferred stock of the Federal Home Loan Mortgage Corporation, with a par value of $2.50 per share, shall be changed into and shall become 1 share of voting common stock of the Corporation. Such voting common stock shall, with respect to the nonvoting common stock of the Corporation, retain all of the rights, priorities and privileges of the senior participating preferred stock. The transformation of the senior participating preferred stock into voting common stock under this paragraph shall be deemed to satisfy the obligation of the Corporation to redeem senior participating preferred stock for non-callable common stock. (3) Conforming amendments.— (A) Subscriptions of federal home loan banks.— Section 304(b) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(b)) is amended by inserting “nonvoting” before “common”. (B) Allocation of subscriptions.— Section 304(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(c)) is amended by striking “such” and by inserting “nonvoting common” before “stock”. (C) Retirement of stock.— Section 304(d) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(d)) is amended by inserting “nonvoting common” before “stock” each place it appears. (e) Mortgage Operations.— (1) Prohibition on fees.— Section 305(a)(1) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(1) is amended by adding at the end the following: “Nothing in this section authorizes the Corporation to impose any charge or fee upon any mortgagee approved by the Secretary of Housing and Urban Development for participation in any mortgage insurance program under the National Housing Act solely because of such status.”. (2) Lending activities.— Section 305(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)) is amended by adding at the end the following new paragraph: “(5) The Corporation is authorized to lend on the security of, and to make commitments to lend on the security of, any mortgage that the Corporation is authorized to purchase under this section. The volume of the Coiporation’s lending activities and the establishment of its loan ratios, interest rates, maturities, and charges or fees in its secondary market operations under this paragraph, shall be determined by the Corporation from time to time; and such determinations shall be consistent with the objectives that the lending activities shall be conducted on such terms as will reasonably prevent excessive use of the Corporation’s facilities, and that the operations of the Corporation under this paragraph shall be within its income derived from such operations and that such operations shall be fully self-supporting. The Corporation shall not be permitted to use its lending authority under this paragraph (A) to advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans. Notwithstanding any Federal, State, or other law to the contrary, the Corporation is hereby empowered, in connection with any loan under this paragraph, whether before or after any default, to provide by contract with the borrower for the settlement or extinguishment, upon default, of any redemption, equitable, legal, or other right, title, or interest of the borrower in any mortgage or mortgages that constitute the security for the loan; and with respect to any such loan, in the event of default and pursuant otherwise to the terms of the contract, the mortgages that constitute such security shall become the absolute property of the Corporation.”. (f) References to FSLIC and FHLBB.— (1) Section 302.— Section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) is amended— (A) in the 4th sentence, by striking out “Federal Savings and Loan Insurance Corporation” and inserting in lieu thereof “Resolution Trust Corporation”; and (B) in the 8th sentence, by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Federal Housing Finance Board”. (2) Section 305.— Section 305 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454) is amended— (A) by striking out “Federal Savings and Loan Insurance Corporation” each place it appears and inserting in lieu thereof “Resolution Trust Corporation”; and (B) in subsection (a)(2), by striking out “Federal Home Loan Bank Board“ and inserting in lieu thereof “Federal Housing Finance Board”. (g) Standby Crédit.— Section 306(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(c)) is amended to read as follows: “(c) (1) The Secretary of the Treasury may purchase any obligations issued under subsection (a). For such purpose, the Secretary may use as a public debt transaction the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under such chapter are extended to include such purpose. “(2) The Secretary of Treasury shall not at any time purchase any obligations under this subsection if the purchase would increase the aggregate principal amount of the outstanding holdings of obligations under this subsection by the Secretary to an amount greater than $2,250,000,000. “(3) Each purchase of obligations by the Secretary of the Treasury under this subsection shall be upon terms and conditions established to yield a rate of return determined by the Secretary to be appropriate, taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the making of the purchase. “(4) The Secretary of the Treasury may at any time sell, upon terms and conditions and at prices determined by the Secretary, any of the obligations acquired by the Secretary under this subsection. “(5) All redemptions, purchases and sales by the Secretary of the Treasury of obligations under this subsection shall be treated as public debt transactions of the United States.”. (h) Preferred Stock.— Section 306(f) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(f)) is amended to read as follows: “(f) The Corporation may have preferred stock on such terms and conditions as the Board of Directors shall prescribe. Any preferred stock shall not be entitled to vote with respect to the election of any member of the Board of Directors.”. (i) Terms of Obligations.— Section 306 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455) is amended by adding at the end the following new subsections: “(j) (1) Any notes, debentures, or substantially identical types of unsecured obligations of the Corporation evidencing money borrowed, whether general or subordinated, shall be issued upon the approval of the Secretary of the Treasury and shall have such maturities and bear such rate or rates of interest as may be determined by the Corporation with the approval of the Secretary of the Treasury. “(2) Any notes, debentures, of substantially identical types of unsecured obligations of the Corporation having maturities of 1 year or less that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 365 days after such date of enactment. “(3) Any notes, debentures, or substantially identical types of unsecured obligations of the Corporation having maturities of more than 1 year that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recov-ery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 60 days after such date of enactment. “(k) (1) Any securities in the form of debt obligations or trust certificates of beneficial interest, or both, and based upon mortgages held and set aside by the Corporation, shall be issued upon the approval of the Secretary of the Treasury and shall have such maturities and shall bear such rate or rates of interest as may be determined by the Corporation with the approval of the Secretary of the Treasury. “(2) Any securities in the form of debt obligations or trust certificates of beneficial interest, or both, and based upon mortgages held and set aside by the Corporation, that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection.”. (j) State Limitations.— (1) The second sentence of section 307(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(a)) is amended to read as follows; “The Corporation is authorized to conduct its business without regard to any qualification or similar statute in any State.”. (2) The amendment made by this subsection shall not apply to 12 USC 1456 note. any assertion of priority by the Federal Home Loan Mortgage Corporation with respect to any cause of action or claim filed before the date of the enactment of this Act. (k) Penal Provisions.— Section 308 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1457) is amended— (1) in subsection (a), by striking the subsection designation; and (2) by striking subsections (b), (c), (d), (e), and (f). (l) Construction.— Section 310 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1459) is amended— (1) in the section heading, by striking “construction and”; and (2) by striking the first sentence. (m) Conforming Amendments to Federal National Mortgage Association Charter Act.— (1) Statement of purpose.— Section 301 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1716) is amended— (A) by striking paragraphs (a) and (b) and inserting the following new paragraphs; “(1) provide stability in the secondary market for home mortgages; “(2) respond appropriately to the private capital market; “(3) provide ongoing assistance to the secondary market for home mortgages (including mortgages securing housing for low- and moderate-income families involving a reasonable economic return) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for home mortgage financing; and”; and (B) by redesignating paragraph (c) as paragraph (4). (2) Lending activities.— Section 304(a)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719(a)(2)) is amended— (A) by inserting after the 3rd sentence the following new sentence: “The corporation shall not be permitted to use its lending authority (A) to advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans.”; and (B) by striking the 1st and 2d sentences. (3) Audits by gao.— Section 309 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a) is amended by adding at the end the following new subsection: “(j) The mortgage transactions of the corporation may be subject to audit by the Comptroller General of the United States in accordance with the principles and procedures applicable to commercial corporation transactions under such rules and regulations as may be prescribed by the Comptroller General. The representatives of the General Accounting Office shall have access to such books, accounts, financial records, reports, files, and such other papers, things, or property belonging to or in use by the corporation and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by Reports. depositories, fiscal agents, and custodians. A report on each such audit shall be made by the Comptroller General to the Congress. The corporation shall reimburse the General Accounting Office for the full cost of any such audit as billed therefor by the Comptroller General.”. Subtitle C— Technical and Conforming Amendments SEC. 741. REPEAL OF LIMITATION OF OBLIGATION FOR ADMINISTRATIVE EXPENSES. Section 7(b) of the First Deficiency Appropriation Act of 1936 (15 U.S.C. 712a(b)) is amended by striking the following: “(1) Federal Home Loan Bank Board;”; “(2) Home Owners’ Loan Corporation;”; and “(11) Federal Savings and Loan Insurance Corporation;”. SEC. 742. AMENDMENT OF TITLE 5, UNITED STATES CODE. (a) Executive Schedule.— (1) Section 5314 of title 5, United States Code (5 U.S.C. 5315) is amended— (A) by striking “Chairman of the Federal Home Loan Bank Board.”; and (B) by adding at the end thereof the following: “Director of the Office of Thrift Supervision. “Chairperson of the Federal Housing Finance Board.”. (2) Section 5315 of title 5, United States Code (5 U.S.C. 5315) is amended— (A) by striking out “Members, Federal Home Loan Bank Board.”, and (B) by inserting “Directors, Federal Housing Finance Board ”. (b) Limitation on Pay Fixed by Administrative Action.— Section 5373(2) of title 5, United States Code, is amended by inserting after “481,” the following: “1437, 1439,”. (c) Definition of Agency.— Section 3132(a)(1) of title 5, United States Code (5 U.S.C. 3132(a)(1), is amended— (1) in subparagraph (B), by striking “or” after the semicolon; (2) in subparagraph (C), by inserting “or” after the semicolon; and (3) by adding at the end the following: “(D) the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Housing Finance Board, the Resolution Trust Corporation, and the National Credit Union Administration;”. SEC. 743. AMENDMENT OF BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT PROVISIONS. (a) Section 255(g)(1)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended— (1) by inserting after the item relating to the Comptroller of the Currency the following new item: “Director of the Office of Thrift Supervision;”; (2) by striking out “Federal Home Loan Bank Board;” and inserting in lieu thereof the following new items: “Federal Deposit Insurance Corporation, Bank Insurance Fund; “Federal Deposit Insurance Corporation, FSLIC Resolution Fund; “Federal Deposit Insurance Corporation, Savings Association Insurance Fund;”; (3) by striking out “Federal Home Loan Bank Board, Federal Savings and Loan Insurance Corporation” and inserting in lieu thereof “Federal Housing Finance Board”; and (4) by inserting after the item relating to the Postal service fund the following new items: “Resolution Funding Corporation; “Resolution Trust Corporation;”. (b) Section 256(b)(4) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 256(b)(4)) is amended— 2 USC 906. (1) by striking out subparagraph (C) and inserting in lieu thereof the following new subparagraph “(C) Office of Thrift Supervision.”; (2) by striking subparagraph (D) and inserting in lieu thereof the following new subparagraph: “(D) Office of Thrift Supervision.”; and (3) by adding at the end thereof the following new subparagraphs: “(H) Resolution Funding Corporation. “(I) Resolution Trust Corporation.”. (c) Section 255(g)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985 is amended by striking “Federal Savings and Loan Insurance Corporation fund (82–4037–0–3–371);”. SEC. 744. CONFORMING AMENDMENTS TO FINANCIAL INSTITUTION RELATED ACTS. (a) Federal Financial Institutions Examination Council Act.— (1) Section 1003.— Section 1003 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3302) is amended— (A) in paragraph (1), by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Office of Thrift Supervision”; and (B) in paragraph (3), by striking out “savings and loan association” and inserting in lieu thereof “savings association”. (2) Section 1004.— Section 1004(a)(4) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3303(a)(4)) is amended by striking out “Chairman of the Federal Home Loan Bank Board, and” and inserting in lieu thereof “Director, Office of Thrift Supervision”. (3) Section 1006.— Section 1006(d) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3305(d)) is amended in the 2d sentence by inserting “and employees of the Federal Housing Finance Board” after “supervisoiy agencies”. (b) Right to Financial Privacy Act.— Section 1101 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401) is amended— (1) in paragraph (1), by striking out “savings and loan” and inserting in lieu thereof “savings association”; (2) in paragraph (6), by striking out subparagraph (B) and redesignating the remaining subparagraphs as subparagraphs (B) through (H), respectively; and (3) in paragraph (6)(B) (as so redesignated), by striking out “the Federal Home Loan Bank Board” and inserting in lieu thereof “Director, Office of Thrift Supervision”. (c) Alternative Mortgage Transactions Parity Act.— The Alternative Mortgage Transactions Parity Act of 1982 (12 U.S.C. 3801–06) is amended by striking out “Federal Home Loan Bank Board” each place such term appears and inserting in lieu thereof “Director of the Office of Thrift Supervision”. (d) Expedited Funds Availability Act.— Section 610(a)(2) of the Expedited Funds Availability Act (12 U.S.C. 4009(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision in the case of savings associations the deposits of which are insured by the Federal Deposit Insurance Corporation; and”. (e) Paperwork Reduction Act.— Section 2(a)(10) of the Paperwork Reduction Act of 1980 (44 U.S.C. 3502(a)(10)) is amended by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “the Federal Housing Finance Board”. (f) Federal Property and Administrative Services Act.— Section 602(11) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 474(11)) is amended— (1) by inserting “or the Resolution Trust Corporation” after “Department of Housing and Urban Development”; (2) by striking out “savings and loan accounts” and inserting in lieu thereof “savings association accounts”; and (3) by inserting “under the Federal Deposit Insurance Act or any other law.” after “National Housing Act”. (g) Public Buildings Act.— Section 13(4) of the Public Buildings Act of 1959 (40 U.S.C. 612(d)) is amended by striking out subparagraph (D). (h) Bank Protection Act.— Section 2 of the Bank Protection Act of 1968 (12 U.S.C. 1881) is amended— (1) in paragraph (4), by— (A) striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Director of the Office of Thrift Supervision”; (B) striking out “and loan”; and (C) striking “associations” and all that follows through “Corporation”; and (2) in paragraph (3), by inserting “and State savings associations” before “, and”. (i) The Federal Reserve Act.— (1) Section 11.— Section 11(a)(2) of the Federal Reserve Act (12 U.S.C. 248(a)(2)) is amended by striking “(iii) Federal Home Loan Bank Board in the case of any institution insured by the Federal Savings and Loan Insurance Corporation” and inserting “(iii) the Director of the Office of Thrift Supervision in the case of any savings association which is an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act)”. (2) Section 19(b).— Section 19(b)(1)(A)(vi) of the Federal Reserve Act (12 U.S.C. 461(b)(1)(A)(vi)) is amended to read as follows: “(vi) any savings association (as defined in section 3 of the Federal Deposit Insurance Act) which is an insured depository institution (as defined in such Act) or is eligible to apply to become an insured depository institution under the Federal Deposit Insurance Act; and”. (3) Section 19.— Section 19 of the Federal Reserve Act (12 U.S.C. 461) is amended by striking out “the Federal Home Loan Bank Board,” and inserting in lieu thereof “the Director of the Office of Thrift Supervision,” each place it appears. (j) Public Law 93–495.— Section 3 of title I of Public Law 93–495 (12 U.S.C. 250) is amended by striking “Federal Home Loan Bank Board” and inserting “Director of the Office of Thrift Supervision”. (k) Truth in Lending Act.— Section 108(a)(2) of the Truth in Lending Act (15 U.S.C. 1607(a)(2)) is amended to read as follows: (2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (l) Fair Credit Reporting Act.— Section 621(b)(2) of the Fair Credit Reporting Act (15 U.S.C. 1681s(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (m) Equal Credit Opportunity Act.— Section 704(a)(2) of the Equal Credit Opportunity Act (15 U.S.C. 1691c(a)(2)) is amended to read as follows: “(2) Section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (n) Fair Debt Collection Practices Act.— Section 814(b)(2) of the Fair Debt Collection Practices Act (15 U.S.C. 1692/(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (o) Electronic Fund Transfer Act.— Section 917(a)(2) of the Electronic Fund Transfer Act (15 U.S.C. 1693o(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (p) Home Mortgage Disclosure Act of 1975.— (1) Section 305.— Section 305(b)(2) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2804(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation; and”. (2) Section 306.— Section 306(b)(2) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2805(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (3) Section 307.— Section 307 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2806) is amended by striking “Federal Home Loan Bank Board” each place it appears and inserting “Director of the Office of Thrift Supervision”. (q) Community Reinvestment Act of 1977.— Section 803(1)(D) of the Community Reinvestment Act of 1977 (12 U.S.C. 2902(1)(D)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and a savings and loan holding company;”. (r) Depository Institutions Management Interlocks Act.— (1) Section 207(4) of the Depository Institutions Management Interlocks Act (12 U.S.C. 3206(4)) is amended to read as follows: “(4) the Director of the Office of Thrift Supervision with respect to a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and savings and loan holding companies,”. (s) Depository Institutions Deregulation Act of 1980.— Section 208(a)(2) of the Depository Institutions Deregulation Act of 1980 (12 U.S.C. 3507(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (t) Federal Trade Commission Act.— Section 18(f)(3) of the Federal Trade Commission Act (Ifî U.S.C. 57a(f)(3)) is amended to read as follows: “(3) Compliance with regulations prescribed under this subsection shall be enforced under section 8 of the Federal Deposit Insurance Act with respect to savings associations as defined in section 3 of the Federal Deposit Insurance Act.”, (u) Securities Exchange Act of 1934.— (1) Section 3.— Section 3(a)(34) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(34)) is amended— (A) in subparagraph (G)— (i) by striking clauses (iv) and (v) and inserting the following: “(iv) the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”; and (ii) by redesignating clause (vi) as clause (v); and (B) in the second sentence, by striking “the Federal Home Loan Bank Board” and inserting “the Office of Thrift Supervision”. (2) Section 12.— Section 12(i) of the Securities Exchange Act of 1934 (15 U.S.C. 78/(i)) is amended— (A) in the first sentence— (i) by inserting “and savings associations” after “banks” the first place it appears; (ii) by striking “or institutions the accounts of which are insured by the Federal Savings and Loan Insurance Corporation”; and (iii) by striking paragraph (4) and inserting “(4) with respect to savings associations the accounts of which are insured by the Federal Deposit Insurance Corporation are vested tn the Office of Thrift Supervision”; and (B) in the second sentence, by striking “the Federal Home Loan Bank Board” and inserting “the Office of Thrift Supervision”. (5) Section 15.— Section 15C(f)(1) (15 U.S.C. 78o-5(f)(1)) of such Act is amended by striking “Federal Home Loan Bank Board” and inserting “Director of the Office of Thrift Supervision”.

14. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 title VII · 103 Stat. 183

    1. Redesignated · 12 U.S.C. § 1426(b)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), redesignated subsec. (c) as (b)

    2. Redesignated · 12 U.S.C. § 1426(b)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), substituted “Board may” for “Federal Home Loan Bank Board may” in par. (1), and “The Board” for “The Federal Home Loan Bank Board” in par. (5). Former subsec. (b) redesignated (a)

    Source evidence

    Code amendment note
    Subsec. (b). Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), redesignated subsec. (c) as (b) and substituted “Board may” for “Federal Home Loan Bank Board may” in par. (1), and “The Board” for “The Federal Home Loan Bank Board” in par. (5). Former subsec. (b) redesignated (a).

    Enacted provision · exact public law
    TITLE VII— FEDERAL HOME LOAN BANK SYSTEM REFORMS Subtitle A— Federal Home Loan Bank Act Amendments SEC. 701. DEFINITIONS. (a) In General.— Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is amended— (1) by striking paragraphs (1) and (2) and inserting the following: “(1) Board.— The term ‘Board’ means the Federal Housing Finance Board established under section 2A. “(2) (A) Bank.— The term ‘Federal Home Loan Bank’ or ‘Bank’ means a bank established under the authority of the Federal Home Loan Bank Act. “(B) Bank system.— The term ‘Federal Home Loan Bank System’ means the Federal Home Loan Banks under the supervision of the Board.”; (2) in paragraph (4) by striking “(except when used in reference to the member of the Board)”; and (3) by striking paragraph (9) and adding at the end the following: “(9) Savings association.— The term ‘savings association’ has the meaning given to such term in section 3 of the Federal Deposit Insurance Act. “(10) Chairperson.— The term ‘Chairperson’ means the Chairperson of the Board. “(11) Secretary.— The term ‘Secretary’ means the Secretary of Housing and Urban Development. “(12) Insured depository institution.— The term ‘insured depository institution’ means— “(A) an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act), and “(B) except as used in sections 21A and 21B, an insured credit union (as defined in section 101 of the Federal Credit Union Act).”. (b) Change in Terms.— (1) In general— Except as otherwise specifically provided in 12 USC 1421 et seq. this title, the Federal Home Loan Bank Act is amended by striking “board” (other than in section 7) and “Federal Home Loan Bank Board” each place such terms appear and inserting “Board”. (2) Chairperson.— The Federal Home Loan Bank Act is amended by striking “Chairman” and “chairman” each place such terms appear and inserting “Chairperson” and “chairperson”. (3) Exceptions.— (A) General rule.— The amendments made by paragraph (1) shall not apply to sections 18(c), 21A, and 21B of the Federal Home Loan Bank Act. (B) Conforming amendment.— Section 18(c) of the Federal Home Loan Bank Act (12 U.S.C. 1438(c)) is amended by striking “Federal Home Loan Bank Board” and “board” each place such terms appear and inserting “Director of the Office of Thrift Supervision”. (c) Technical Amendments — Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended— (1) in subsection (e)(2)(C), by inserting “Federal Home Loan” before “Banks,”; and (2) in the first sentence of the third paragraph of subsection (i) by inserting “Federal” before “Home Loan Bank System”. SEC. 702. FEDERAL HOUSING FINANCE BOARD ESTABLISHED. (a) In General.— The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended by inserting after section 2 the following new sections: “SEC. 2A. FEDERAL HOUSING FINANCE BOARD. “(a) Establishment.— “(1) In general.— There is established the Federal Housing Finance Board, which shall succeed to the authority of the Federal Home Loan Bank Board with respect to the Federal Home Loan Banks. “(2) Status.— The Board shall be an independent agency in the executive branch of the Government. “(3) Duties.— The duties of the Board shall be— “(A) to supervise the Federal Home Loan Banks, “(B) to ensure that the Federal Home Loan Banks carry out their housing finance mission, “(C) to ensure the Federal Home Loan Banks remain adequately capitalized and able to raise funds in the capital markets, and “(D) to ensure the Federal Home Loan Banks operate in a safe and sound manner. “(b) Management.— “(1) In general.— The management of the Board shall be vested in a Board of Directors consisting of 5 directors as follows: “(A) The Secretary who shall serve without additional compensation. “(B) Four citizens of the United States, appointed by the President, by and with the advice and consent of the Senate, each of whom shall hold office for a term of 7 years. “(2) Provisions relating to appointed directors.— “(A) In general.— The directors appointed pursuant to paragraph (1)(B) shall be from among persons with extensive experience or training in housing finance or with a commitment to providing specialized housing credit. An appointed director shall not hold any other appointed office during his or her term as director. Not more than 3 directors shall be members of the same political party. Not more than 1 appointed director shall be from any single district of the Federal Home Loan Bank System. Nominations pursuant to this subparagraph shall be referred in the Senate to the Committee on Banking, Housing, and Urban Affairs. “(B) Consumer representative.— At least 1 director shall be chosen from an organization with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections. “(C) Limitations on conflicts of interest.— No director may— “(i) serve as a director or officer of any Federal Home Loan Bank or any member of any Bank; or “(ii) hold shares of, or any other financial interest in, any member of any such Bank. “(3) Initial terms.— Notwithstanding paragraph (2), of the directors first appointed— “(A) one shall be appointed for a term of 1 year; “(B) one shall be appointed for a term of 3 years; and “(C) one shall be appointed for a term of 5 years. “(c) Chairperson; Transitional Provisions.— “(1) In general.— The President shall designate 1 of the appointed directors to be the Chairperson of the Board. The Chairperson shall designate another director to serve as Acting Chairperson during the absence or disability of the Chairperson. “(2) Transitional provision.— Beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, until such time that at least 2 directors are appointed and confirmed pursuant to subsection (b), the Secretary shall act for all purposes and with the full powers of the Board of Directors. The Secretary may utilize the services of employees from the Department of Housing and Urban Development to perform services for the Board of Directors during such transition period. “(d) Vacancies.— “(1) In general.— Any vacancy on the Board of Directors shall be filled in the manner in which the original appointment was made. Any director appointed to fill a vacancy occurring before the expiration of the term for which such director’s predecessor was appointed shall be appointed only for the remainder of such term. Each director may continue to serve until a successor has been appointed and qualified. “(2) The secretary.— In the event of a vacancy in the office of Secretary or during the absence or disability of the Secretary, the Acting Secretary shall act as a director in place of the Secretary. “SEC. 2B. POWERS AND DUTIES. “(a) General Powers.— -The Board shall have the following powers: “(1) To supervise the Federal Home Loan Banks and to promulgate and enforce such regulations and orders as are necessary from time to time to carry out the provisions of this Act. “(2) To suspend or remove for cause a director, officer, employee, or agent of any Federal Home Loan Bank or joint office. The cause of such suspension or removal shall be communicated in writing to such director, officer, employee, or agent and to such Bank or joint office. Notwithstanding any other provision of this Act, no officer, employee, or agent of a Bank or joint office shall be a Federal officer or employee under any definition of either term in title 5, United States Code. “(3) To determine necessary expenditures of the Board under this Act and the manner in which such expenditures shall be incurred, allowed, and paid. “(4) To use the United States mails in the same manner and under the same conditions as a department or agency of the United States. “(b) Staff.— “(1) Board staff.— Subject to title IV of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board may employ, direct, and fix the compensation and number of employees, attorneys, and agents of the Federal Housing Finance Board, except that in no event shall the Board delegate any function to any employee, administrative unit of any Bank, or joint office of the Federal Home Loan Bank System. The prohibition contained in the preceding sentence shall not apply to the delegation of ministerial functions including issuing consolidated obligations pursuant to section 11(b). In directing and fixing such compensation, the Board shall consult with and maintain comparability with the compensation at the Federal bank regulatory agencies. Such compensation shall be paid without regard to the provisions of other laws applicable to officers or employees of the United States, except the Chairperson and other Directors shall be compensated as prescribed in sections 5314 and 5315 of title 5, United States Code, respectively. “(2) Abolition of joint offices.— The joint or collective offices of the Federal Home Loan Bank System, except for the Office of Finance, are hereby abolished. “(c) Receipts of the Board.— Receipts of the Board derived from assessments levied upon the Federal Home Loan Banks and from other sources (other than receipts from the sale of consolidated Federal Home Loan Bank bonds and debentures issued under section 11 of this Act) shall be deposited in the Treasury of the United States. Salaries of the directors and other employees of the Board and all other expenses thereof may be paid from such assessments or other sources and shall not be construed to be Government Funds or appropriated monies, or subject to apportionment for the purposes of chapter 15 of title 31, United States Code, or any other authority. “(d) Annual Report.— The Board shall make an annual report to the Congress.”. (b) Audits and Reports.— Section 20 of the Federal Home Loan Bank Act (12 U.S.C. 1440) is amended by adding at the end the following: “In addition to such examinations, the Comptroller General may audit or examine the Board and the Banks, to determine the extent to which the Board and the Banks are fairly and effectively fulfilling the purposes of this Act.”. (c) Appointment of Inspector General.— Section 8E(a)(2) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking “Federal Home Loan Bank Board,“ and inserting “Federal Housing Finance Board,”. SEC. 703. TERMINATION OF THE FEDERAL HOME LOAN BANK BOARD. (a) In General.— Section 17 of the Federal Home Loan Bank Act (12 U.S.C. 1437) is hereby repealed. SEC. 704. ELIGIBILITY FOR MEMBERSHIP. (a) Insured Depository Institutions.— Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 1424(a)) is amended to read as follows: “(a) Criteria for Eligibility.— “(1) In general.— Any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, savings bank, or any insured depository institution (as defined in section 2 of this Act), shall be eligible to become a member of a Federal Home Loan Bank if such institution— “(A) is duly organized under the laws of any State or of the United States; “(B) is subject to inspection and regulation under the banking laws, or under similar laws, of the State or of the United States; and “(C) makes such home mortgage loans as, in the judgment of the Board, are long-term loans (except that in the case of a savings bank, this subparagraph applies only if, in the judgment of the Board, its time deposits, as defined in section 19 of the Federal Reserve Act, warrant its making such loans). “(2) Qualified thrift lender.— An insured depository institution that is not a member on January 1, 1989, may become a member of a Federal Home Loan Bank only if— “(A) the insured depository institution has at least 10 percent of its total assets in residential mortgage loans; “(B) the insured depository institution’s financial condition is such that advances may be safely made to such institution; and “(C) the character of its management and its home-financing policy are consistent with sound and economical home financing. An insured depository institution commencing its initial business operations after January I, 1989, may become a member of a Federal Home Loan Bank if it complies with regulations and orders prescribed by the Board for the 10 percent asset requirement (described in the preceding sentence) within one year after the commencement of its operations.”. (c) Repeal of Section 27.— Section 27 of the Federal Home Loan Bank Act (12 U.S.C. 1447) is hereby repealed. SEC. 705. REPEAL OF PROVISION RELATING TO RATE OF INTEREST ON DEPOSITS. Section 5B of the Federal Home Loan Bank Act (12 U.S.C. 1425b) is hereby repealed. SEC. 706. CAPITAL STOCK. Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426) is amended— (1) by striking subsections (a), (e), (f), and (g) and redesignating subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), (b), (c), (d), (e), (f), (g), and (h), respectively; (2) by striking the second sentence of subsection (e) (as redesignated by paragraph (1) of this section) and inserting the following: “If any member’s membership in a Federal Home Loan Bank is terminated, the indebtedness of such member to the Federal Home Loan Bank shall be liquidated in an orderly manner (as determined by the Federal Home Loan Bank), and upon completion of such liquidation, the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled. Any such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties or other fees applicable to such prepayment.”; and (3) in subsection (h) (as redesignated by paragraph (1) of this section), by striking “charter” and all that follows through the end period and inserting “charter as a Federal savings association (as defined in section 3 of the Federal Deposit Insurance Act).”. SEC. 707. ELECTION OF BANK DIRECTORS. Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is amended— (1) in subsection (a)— (A) by striking “appointed by the Federal Home Loan Bank Board referred to in subsection (b) of section 17, hereinafter in this section referred to as the Board” and inserting “appointed by the Board referred to in section 2A”, (B) by inserting after the last sentence the following: “At least 2 of the Federal Home Loan Bank directors who are appointed by the Board shall be representatives chosen from organizations with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections. No Federal Home Loan Bank director who is appointed pursuant to this subsection may, during such Bank director’s term of office, serve as an officer of any Federal Home Loan Bank or a director or officer of any member of a Bank, or hold shares, or any other financial interest in, any member of a Bank.”; (2) by inserting after the first sentence of subsection (b) the following: “No person who is an officer or director of a member that fails to meet any applicable capital requirement is eligible to hold the office of Federal Home Loan Bank director.”; (3) by amending subsection (f) to read as follows: “(f) Vacancies.— “(1) In general.— A Bank director appointed or elected to fill a vacancy shall be appointed or elected for the unexpired term of his or her predecessor in office. “(2) Appointed bank directors.— In the event of a vacancy in any appointive Bank directorship, such vacancy shall be filled through appointment by the Board for the unexpired term. If any appointive Bank director shall cease to have the qualifications set forth in subsection (a), the office held by such person shall immediately become vacant, but such person may continue to act as a Bank director until his or her successor assumes the vacated office or the term of such office expires, whichever occurs first. “(3) Elected bank directors.— In the event of a vacancy in any elective Bank directorship, such vacancy shall be filled by an affirmative vote of a majority of the remaining Bank directors, regardless of whether such remaining Bank directors constitute a quorum of the Bank’s board of directors. A Bank director so elected shall satisfy the requirements for eligibility which were applicable to his predecessor. If any elective Bank director shall cease to have any qualification set forth in this section, the office held by such person shall immediately become vacant, and such person shall not continue to act as a Bank director.”; and (4) by adding at the end the following new subsection: “(k) Indemnification of Directors, Officers, and Employees.— The board of directors of each Bank shall determine the terms and conditions under which such Bank may indemnify its directors, officers, employees or agents.”. SEC. 708. REPEAL OF PROVISIONS RELATING TO CERTAIN POWERS OF THE FEDERAL HOME LOAN BANK BOARD. Section 19 of the Federal Home Loan Bank Act (12 U.S.C. 1439) is hereby repealed. SEC. 709. POWERS AND DUTIES OF BANKS. Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended— (1) in subsection (e)(1), by inserting “incidental to activities” after “not”; (2) in subsection (f), by striking out “or whenever in the judgment of at least 4 members of the board an emergency exists requiring such action”; (3) by amending subsection (k) to read as follows: “(k) Bank Loans to SAIF.— “(1) Loans authorized.— Subject to paragraph (3), the Federal Home Loan Banks may, upon the request of the Federal Deposit Insurance Corporation, make loans to such Corporation for the use of the Savings Association Insurance Fund. “(2) Liability of the fund.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall be a direct liability of the Savings Association Insurance Fund. “(3) Interest on and security for such loans.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall— “(A) bear a rate of interest not less than such Bank’s current marginal cost of funds, taking into account the maturities involved; and “(B) be adequately secured.”. SEC. 710. ELIGIBILITY OF BORROWERS TO SECURE ADVANCES. (a) In General.— Section 9 of the Federal Home Loan Bank Act (12 U.S.C. 1429) is amended by striking “or nonmember borrower” in the first sentence. (b) Conforming Amendments.— The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended— (1) in sections 2(5) and 4(b), by striking “or a nonmember borrower” wherever it appears; (2) in section 6(e) (as redesignated by section 706 of this Act), by striking “or nonmember borrower” wherever it appears; (3) in section 6(e) (as redesignated by section 706 of this Act), by striking “or deprive any non member borrower of the privilege of further advances,”; (4) in sections 7Q) and 10(c), by striking “or nonmember borrower” wherever it appears; (5) in section 10(c), by striking “, or made to a nonmember borrower” in the second sentence; and (6) in sections 11(g) and 11(h), by striking “or nonmember borrowers” wherever it appears. (c) Community Support.— Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) is amended by adding at the end the following: “(g) Community Support Requirements.— “(1) In general.— Before the end of the 2-year period beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board shall adopt regulations establishing standards of community investment or service for members of Banks to maintain continued access to long-term advances. “(2) Factors to be included.— The regulations promulgated pursuant to paragraph (1) shall take into account factors such as a member’s performance under the Community Reinvestment Act of 1977 and the member’s record of lending to first-time homebuyers.”. SEC. 711. ADMINISTRATIVE EXPENSES. Section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 1437(b)) is amended to read as follows: 12 USC 1438. “(b) Assessments for Administrative Expenses.— “(1) In general.— The Board may impose a semiannual assessment on the Federal Home Loan Banks, the aggregate amount of which is sufficient to provide for the payment of the Board’s estimated expenses for the period for which such assessment is made. “(2) Deficiencies.— If, at any time, amounts available from any assessment for any semiannual period are insufficient to cover the expenses of the Board incurred in carrying out the provisions of this Act during such period, the Board may make an immediate assessment against the Banks to cover the amount of the deficiency for such semiannual period. “(3) Surpluses.— If, at the end of any semiannual period for which an assessment is made, any amount remains from such assessment, such amount will be deducted from the assessment on the Banks by the Board for the following semiannual period. “(4) Transition provision.— On or after the effective date of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board may levy a one-time special assessment on the Banks pursuant to this subsection for the Board’s estimated expenses for the transitional period following enactment of such Act, if such assessment is made before the Board’s first semiannual assessment under paragraph (1).”. SEC. 712. NONADMINISTRATIVE EXPENSES. Subsection (a) of section 18 of the Federal Home Loan Bank Act (12 U.S.C. 1438(a)) and section 19A of such Act (12 U.S.C. 1439–1) are hereby repealed. SEC. 713. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION INDUSTRY ADVISORY COMMITTEE. Subsection (i) of section 21 of the Federal Home Loan Bank Act (12 U.S.C. 1441) is repealed and subsections (i), (k), and (1) are redesignated subsections (i), (j), and (k), respectively. SEC. 714. ADVANCES. (a) In General.— Subsection (a) of section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430(a)) is amended by striking everything after “members” to the end period and inserting the following “upon collateral sufficient, in the judgment of the Bank, to fully secure advances obtained from the Bank under this section or section 11(g) of this Act. All long-term advances shall only be made for the purpose of providing funds for residential housing finance. A Bank, at the time of origination or renewal of a loan or advance, shall obtain and maintain a security interest in collateral eligible pursuant to one or more of the following categories: “(1) Fully disbursed, whole first mortgages on improved residential property (not more than 90 days delinquent), or securities representing a whole interest in such mortgages. “(2) Securities issued, insured, or guaranteed by the United States Government or any agency thereof (including without limitation, mortgage-backed securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Corporation, and the Government National Mortgage Association). “(3) Deposits of a Federal Home Loan Bank. “(4) Other real estate related collateral acceptable to the Bank if such collateral has a readily ascertainable value and the Bank can perfect its interest in the collateral. The aggregate amount of outstanding advances secured by such other real estate related collateral shall not exceed 30 percent of such member’s capital. “(5) Paragraphs (1) through (4) shall not affect the ability of any Federal Home Loan Bank to take such steps as it deems necessary to protect its security position with respect to outstanding advances, including requiring deposits of additional collateral security, whether or not such additional security would be eligible to originate an advance. If an advance existing on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 matures and the member does not have sufficient eligible collateral to fully secure a renewal of such advance, a Bank may renew such advance secured by such collateral as the Bank and the Board determines is appropriate. A member that has an advance secured by such insufficient eligible collateral must reduce its level of outstanding advances promptly and prudently in accordance with a schedule determined by the Board.“. (b) Reduced Eligibility for Advances.— Section 10(e) of the Federal Home Loan Bank Act (12 U.S.C. 1430(e)) is amended to read as follows: “(e) Qualified Thrift Lender Status.— “(1) In general.— A member that is not a qualified thrift lender may only receive an advance if it holds stock in its Federal Home Loan Bank at the time it receives that advance in an amount equal to at least— “(A) 5 percent of that member’s total advances, divided by “(B) such member’s actual thrift investment percentage. Such members that are not qualified thrift lenders may only apply for advances under this section for the purpose of obtaining funds for housing finance. “(2) Priority.— The Board, by regulation, shall establish a priority for advances to members that are qualified thrift lenders. The aggregate amount of any Bank’s advances to members that are not qualified thrift lenders shall not exceed 30 percent of a Bank’s total advances. “(3) Minimum stock purchase requirement for membership.— Each member of a Federal Home Loan Bank shall, at a minimum, purchase and maintain stock in its Federal Home Loan Bank in the amount that would be required under section 6(b) if at least 30 percent of such member’s assets were home mortgage loans. “(4) Exceptions.— Paragraphs (1) and (2) of this subsection do not apply to— “(A) a savings bank as defined in section 3 of the Federal Deposit Insurance Act; or “(B) a Federal savings association in existence as a Federal savings association on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989— “(i) that was chartered as a savings bank or cooperative bank prior to October 15, 1982; or “(ii) that acquired its principal assets from an institution which was chartered prior to October 15, 1982, as a savings bank or cooperative bank under State law. “(5) Definitions.— As used in this subsection— “(A) Savings association.— The term ‘savings association’ has the same meaning as in section 10(a)(1)(A) of the Home Owners’ Loan Act. “(B) Qualified thrift lender.— The term ‘qualified thrift lender’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act. “(C) Actual thrift investment percentage.— The term ‘actual thrift investment percentage’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act.”. (c) Special Liquidity Advances.— Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as amended by section 710(c) of this Act) is amended by adding at the end the following new subsection: “(h) Special Liquidity Advances.— “(1) In general.— Subject to paragraph (2), the Federal Home Loan Banks may, upon the request of the Director of the Office of Thrift Supervision, make short-term liquidity advances to a savings association that— “(A) is solvent but presents a supervisory concern because of such association’s poor financial condition; and “(B) has reasonable and demonstrable prospects of returning to a satisfactory financial condition. “(2) Interest on and security for special liquidity advances.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall be subject to all applicable collateral requirements, including the requirements of section 10(a) of this Act, and shall be at an interest rate no less favorable than those made available for similar short-term liquidity advances to savings associations that do not present such supervisory concern.”. SEC. 715. AMENDMENTS RELATING TO WITHDRAWAL FROM FEDERAL HOME LOAN BANK MEMBERSHIP. Section 6(h) of the Federal Home Loan Bank Act (as redesignated by section 706 of this Act) is amended by striking “five” and inserting “10”. SEC. 716. REPEAL OF PROVISIONS RELATING TO LAWFUL CONTRACT RATE. Section 5 of the Federal Home Loan Bank Act (12 U.S.C. 1425) is hereby repealed. SEC. 717. BANK STOCK AND OBLIGATIONS. Section 23 of the Federal Home Loan Bank Act (12 U.S.C. 1443) is amended to read as follows: “SEC. 23. FORMS OF BANK STOCK AND OBLIGATIONS. “Any stock, debentures, bonds, notes, or other obligations issued under the authority of this Act may be issued in uncertificated form, utilizing a book entry method, or in certificated form under such rules, regulations, or guidelines as the Board of Directors of the Federal Housing Finance Board may provide.”. SEC. 718. THRIFT ADVISORY COUNCIL. Section 8a of the Federal Home Loan Bank Act (12 U.S.C. 1428a) is hereby repealed. SEC. 719. EXAMINATION OF MEMBERS. Section 22 of the Federal Home Loan Bank Act (12 U.S.C. 1442) is amended to read as follows: “SEC 22. MEMBER FINANCIAL INFORMATION. “(a) In General.— In order to enable the Federal Home Loan Banks to carry out the provisions of this Act, the Secretary of the Treasury, the Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, the Chairperson of the Federal Deposit Insurance Corporation, the Chairperson of the National Credit Union Administration, and the Director of the Office of Thrift Supervision, upon request by any Federal Home Loan Bank— “(1) shall make available in confidence to any Federal Home Loan Bank, such reports, records, or other information as may be available, relating to the condition of any member of any Federal Home Loan Bank or any institution with respect to which any such Bank has had or contemplates having transactions under this Act; and “(2) may perform through their examiners or other employees or agents, for the confidential use of the Federal Home Loan Bank, examinations of institutions for which such agency is the appropriate Federal banking regulatory agency. Reports. In addition, the Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, the Chairperson of the National Credit Union Administration, and the Director of the Office of Thrift Supervision shall make available to the Board or any Federal Home Loan Bank the financial reports filed by members of any Bank to enable the Board or a Bank to compile and publish cost of funds indices or other financial or statistical reports. “(b) Consent by Members.— Every member of a Federal Home Loan Bank shall, as a condition precedent thereto, be deemed— “(1) to consent to such examinations as the Bank or the Board may require for the purposes of this Act; “(2) to agree that reports of examinations by local. State, or Federal agencies or institutions may be furnished by such authorities to the Bank or the Board upon request; and “(3) to agree to give the Bank or the Federal agency, upon request, such information as they may need to compile and publish cost of funds indices and to publish other reports or statistical summaries pertaining to the activities of Bank members.”. SEC. 720. LIQUIDITY. Section 5A of the Federal Home Loan Bank Act (12 U.S.C. 1425a) is hereby repealed. SEC. 721. AFFORDABLE HOUSING. Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as amended by section 710 and section 714 of this Act) is amended by adding at the end the following: “(i) Community Investment Program.— “(1) In general.— Each Bank shall establish a program to provide funding for members to undertake community-oriented mortgage lending. Each Bank shall designate a community investment officer to implement community lending and affordable housing advance programs of the Banks under this subsection and subsection (j) and provide technical assistance and outreach to promote such programs. Advances under this program shall be priced at the cost of consolidated Federal Home Loan Bank obligations of comparable maturities, taking into account reasonable administrative costs. “(2) Communityoriented mortgage lending.— For purposes of this subsection, the term ‘community-oriented mortgage lending’ means providing loans— “(A) to finance home purchases by families whose income does not exceed 115 percent of the median income for the area, “(B) to finance purchase or rehabilitation of housing for occupancy by families whose income does not exceed 115 percent of median income for the area, “(C) to finance commercial and economic development activities that benefit low- and moderate-income families or activities that are located in low- and moderate-income neighborhoods, and “(D) to finance projects that further a combination of the purposes described in subparagraphs (A) through (C). “(j) Affordable Housing Program.— “(1) In general.— Pursuant to regulations promulgated by the Board, each Bank shall establish an Affordable Housing Program to subsidize the interest rate on advances to members engaged in lending for long term, low- and moderate-income, owner-occupied and affordable rental housing at subsidized interest rates. “(2) Standards.— The Board’s regulations shall permit Bank members to use subsidized advances received from the Banks to— “(A) finance homeownership by families with incomes at or below 80 percent of the median income for the area; or “(B) finance the purchase, construction, or rehabilitation of rental housing, at least 20 percent of the units of which will be occupied by and affordable for very low-income households for the remaining useful life of such housing or the mortgage term. “(3) Priorities for making advances.— In using advances authorized under paragraph (1), each Bank member shall give prior it y to qualified projects such as the following: “(A) purchase of homes by families whose income is 80 percent or less of the median income for the area, “(B) purchase or rehabilitation of housing owned or held by the United States Government or any agency or instrumentality of the United States; and “(C) purchase or rehabilitation of housing sponsored by any nonprofit organization, any State or political subdivision of any State, any local housing authority or State housing finance agency. “(4) Report.— Each member receiving advances under this program shall report annually to the Bank making such advances concerning the member’s use of advances received under this program. “(5) Contribution to program.— Each Bank shall annually contribute the percentage of its annual net earnings prescribed in the following subparagraphs to support subsidized advances through the Affordable Housing Program: “(A) In 1990, 1991, 1992, and 1993, 5 percent of the preceding year’s net income, or such prorated sums as may e required to assure that the aggregate contribution of all the Banks shall not be less than $50,000,000 for each such year. “(B) In 1994, 6 percent of the preceding year’s net income, or such prorated sum as may be required to assure that the aggregate contribution of the Banks shall not be less than $75,000,000 for such year. “(C) In 1995, and subsequent years, 10 percent of the preceding year’s net income, or such prorated sums as may be required to assure that the aggregate contribution of the Banks shall not be less than $100,000,000 for each such year. “(6) Grounds for Suspending Contributions — “(A) In general.— If a Bank finds that the payments required under this paragraph are contributing to the financial instability of such Bank, it may apply to the Federal Housing Finance Board for a temporary suspension of such payments. “(B) Financial instability.— In determining the financial instability of a Bank, the Federal Housing Finance Board shall consider such factors as (i) whether the Bank’s earnings are severely depressed, (ii) whether there has been a substantial decline in membership capital, and (iii) whether there has been a substantial reduction in advances outstanding. “(C) Review.— The Board shall review the application and any supporting financial data and issue a written decision approving or disapproving such application. The Board’s decision shall be accompanied by specific findings and reasons for its action. “(D) Monitoring suspension.— If the Board grants a suspension, it shall specify the period of time such suspension shall remain in effect and shall continue to monitor the Bank’s financial condition during such suspension. “(E) Limitations on grounds for suspension.— The Board shall not suspend payments to the Affordable Housing Program if the Bank’s reduction in earnings is a result of (i) a change in the terms for advances to members which is not justified by market conditions, (ii) inordinate operating and administrative expenses, or (iii) mismanagement. “(F) The Federal Housing Finance Board shall notify the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate not less than 60 days before such suspension takes effect. Such suspension shall become effective unless a joint resolution is enacted disapproving such suspension. “(7) Failure to use amounts for affordable housing.— If any Bank fails to utilize or commit the full amount provided in this subsection in any year, 90 percent of the amount that has not been utilized or committed in that year shall be deposited by the Bank in an Affordable Housing Reserve Fund administered by the Board. The 10 percent of the unutilized and uncommitted amount retained by a Bank should be fully utilized or committed by that Bank during the following year and any remaining portion must be deposited in the Affordable Housing Reserve Fund. Under regulations established by the Board, funds from the Affordable Housing Reserve Fund may be made available to any Bank to meet additional affordable housing needs in such Bank’s district pursuant to this section. “(8) Net earnings.— The net earnings of any Federal Home Loan Bank shall be determined for purposes of this paragraph— “(A) after reduction for any payment required under section 21 or 21B of this Act; and “(B) before declaring any dividend under section 16. “(9) Regulations.— The Federal Housing Finance Board shall promulgate regulations to implement this subsection. Such regulations shall, at a minimum— “(A) specify activities eligible to receive subsidized advances from the Banks under this program; “(B) specify priorities for the use of such advances; “(C) ensure that advances made under this program will be used only to assist projects for which adequate Long-term monitoring is available to guarantee that affordability standards and other requirements of this subsection are satisfied; “(D) ensure that a preponderance of assistance provided under this subsection is ultimately received by low- and moderate-income households; “(E) ensure that subsidies provided by Banks to member institutions under this program are passed on to the ultimate borrower; “(F) establish uniform standards for subsidized advances under this program and subsidized lending by member institutions supported by such advances, including maximum subsidy and risk limitations for different categories of loans made under this subsection; and “(G) coordinate activities under this subsection with other Federal or federally-subsidized affordable housing activities to the maximum extent possible. “(10) Other programs.— No provision of this subsection or subsection (i) shall preclude any Bank from establishing additional community investment cash advance programs or contributing additional sums to the Affordable Housing Reserve Fund. “(11) Advisory council.— Each Bank shall appoint an Advisory Council of 7 to 15 persons drawn from community and nonprofit organizations actively involved in providing or promoting low- and moderate-income housing in its district. The Advisory Council shall meet with representatives of the board of directors of the Bank quarterly to advise the Bank on low- and moderate-income housing programs and needs in the district and on the utilization of the advances for these purposes. Each Advisory Council established under this paragraph shall submit to the Board at least annually its analysis of the low-income housing activity of the Bank by which it is appointed. “(12) Reports to congress.— “(A) The Board shall monitor and report annually to the Congress and the Advisory Council for each Bank the support of low-income housing and community development by the Banks and the utilization of advances for these purposes. “(B) The analyses submitted by the Advisory Councils to the Board under paragraph (11) shall be included as part of the report required by this paragraph. “(C) The Comptroller General of the United States shall audit and evaluate the Affordable Housing Program established by this subsection after such program has been operating for 2 years. The Comptroller General shall report to Congress on the conclusions of the audit and recommend improvements or modifications to the program. “(13) Definitions.— For purposes of this subsection— “(A) Low- or moderate-income household.— The term ‘low- or moderate-income household’ means any household which has an income of 80 percent or less of the area median. “(B) Very low-income household.— The term ‘very low-income household’ means any household that has an income of 50 percent or less of the area median. “(C) low- or moderate-income neighborhood.— The term ‘low- or moderate-income neighborhood’ means any neighborhood in which 51 percent or more of the households are low- or moderate-income households. “(D) Affordable for very-low income households.— For purposes of paragraph (2)(B) the term ‘affordable for very-low income households’ means that rents charged to tenants for unite made available for occupancy by low-income families shall not exceed 30 percent of the adjusted income of a family whose income equals 50 percent of the income for the area (as determined by the Secretary of Housing and Urban Development) with adjustment for family size.”. SEC. 722. TRANSFERRED EMPLOYEES OF FEDERAL HOME LOAN RANKS AND JOINT OFFICES. (a) In General.— Each employee of the Federal Home Loan Banks or joint offices of such Banks performing a function identified for transfer under section 403 of this Act, including employees who otherwise would be ineligible for employment by the United States because of their citizenship, shall be transferred for employment not later than 60 days after the date of the enactment of this Act. (b) Notice to Employees.— Transferring employees shall receive notice of their position assignments not later than 120 days after the effective date of their transfer. (c) Guaranteed Position.— Each transferred employee shall be guaranteed a position with the same status and tenure as that held by such employee on the day immediately preceding the transfer. Each such employee holding a permanent position shall not be involuntarily separated for one year after the date of transfer, except for cause. (d) Pay and Benefits.— Each employee transferred under this section shall be entitled to receive, during the one-year period immediately following the transfer, pay and benefits comparable to those received by such employee immediately preceding the transfer. Where necessary or appropriate to further the safety and soundness of the thrift industry, the employing agency may continue the pre-transfer compensation of any transferring employee for up to 2 years beyond the expiration of the period provided for under the preceding sentence. Such pay and benefits shall be subject to the comparability provisions of this Act. Any transferred employee who suffers a reduction of pay or benefits as a result of such comparability provisions shall be compensated for such reduction during the 1 year period following the transfer by assessments from the Federal Home Loan Bank or joint office of such Banks, from which the employee transferred. In any event, this subsection shall only apply to a transferred employee while such employee remains with the agency to which the employee is transferred. (e) Health Insurance.— If the health insurance program of a transferred employee is not continued by the agency to which the employee is transferred, such employee may elect to participate in the agency’s health insurance program notwithstanding health conditions preexisting at the time of election or enrollment into an alternate health insurance program of the agency to which he or she is transferred and without regard to any other regularly scheduled open season. Such election shall be made within 30 days of the transfer. (f) Equitable Treatment.— The Director of the Office of Thrift Supervision or the Chairperson of the Federal Housing Finance Board shall take such action as is necessary on a case-by-case basis so that employees transferring under this section receive equitable treatment regarding credit for prior service with a Federal entity or instrumentality, or with a Federal Home Loan Bank or joint office of such Banks, with respect to the transferring employees’ retirement accounts and the transferring employees’ accrued leave or vacation time, in recognition of the transferring employees’ supervisory service. (g) Special Rule for Certain Annuitants.— An individual who was a reemployed annuitant on July 26, 1989, and who is transferred under this section, shall not be subject to the deduction from pay required by section 8344 or 8468 of title 5, United States Code, during the 1-year period beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. SEC. 723. TRANSITIONAL PROVISIONS. (a) Federal Home Loan Banks’ Share of Administrative Expenses.— The Federal Home Loan Banks shall pay to the Director of the Office of Thrift Supervision the amount obtained by multiplying the administrative expenses of the Office of Thrift Supervision incurred in connection with functions of the Banks that are trans-ferred to the Office (less any fees or assessments collected by the Office) by a fraction— (1) the numerator of which is the amount of such expenses of the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation paid by the Banks during the 1-year period ending on the date of enactment of this Act; and (2) the denominator of which is the total expenses of such Board and Corporation during such period. No payment under this subsection is required after December 31, 1989. (b) Compensation of Supervisory and Examinations Employees.— The Federal Home Loan Banks shall continue to pay the compensation of employees of the Federal Home Loan Banks or the joint offices of such banks who, on the day before the date of the enactment of this Act, are performing supervisory and examination functions until such supervisory and examination functions are transferred under this Act. Thereafter, the obligation of the Federal Home Loan Banks hereunder to pay such applicable compensation shall continue until the later of— (1) the date which is 120 days after the date of transfer of such supervisory and examination functions to the Office of Thrift Supervision, or (2) March 31, 1990. Payment of such compensation by the Federal Home Loan Banks shall be in lieu of, and not in addition to, the payment of compensation by the Office of Thrift Supervision. (c) Facilities and Support Services.— Until December 31, 1990, the Federal Home Loan Banks, as necessary, shall (with respect to supervisory and examination functions performed by employees transferred from the Federal Home Loan Banks or joint offices of such Banks to the Office of Thrift Supervision), provide the Office of Thrift Supervision facilities and support services comparable to those presently provided for the employees of the Federal Home Loan Banks or joint offices of such Banks performing such supervisory and examination functions, including office space, furniture and equipment, computer, personnel, and other support services. With respect to supervisory and examination functions presently performed by employees of individual Federal Home Loan Banks, each such Bank will only be required to provide such facilities and support services to the extent that the functions continue to be performed in that Bank’s offices. (d) Principal Supervisory Agent.— Beginning on the date of enactment of this Act until the Director of the Office of Thrift Supervision shall otherwise provide, the Principal Supervisory Agent for each Federal Home Loan Bank district shall be the senior supervisory official (other than the President of the Federal Home Loan Bank) employed by the Federal Home Loan Bank in such district on the day before the date of the enactment of this Act, and such employees performing supervisory and examination functions shall continue to be responsible for the supervision and examination of savings associations within such district. SEC. 724. FEDERAL HOME LOAN BANK RESERVES. (a) In General.— Section 16(a) of the Federal Home Loan Bank Act (12 U.S.C. 1436(a)) is amended— (1) by striking the first three sentences and inserting in lieu thereof: “Each Federal Home Loan Bank may carry to a reserve account from time-to-time such portion of its net earnings as may be determined by its board of directors.”; and (2) by striking the fifth sentence and inserting the following: “No dividends shall be paid except out of net earnings remaining after reductions for all reserves, chargeoffs, purchases of capital certificates of the Financing Corporation, and payments relating to the Funding Corporation required under this Act have been provided for, other than chargeoffs or expenses incurred by a Bank in connection with the purchase of capital stock of the Financing Corporation under section 21 or payments relating to the Funding Corporation Principal Fund under section 21B(e), and then only with the approval of the Federal Housing Finance Board. Beginning on January 1, 1992, Effective date. the preceding sentence shall be applied by substituting ‘previously retained earnings or current net earnings’ for ‘net earnings’.”. (b) Effective Date.— The amendment made by subsection (a)(1) 12 USC 1436 note. shall take effect on January 1, 1992. SEC. 725. SPECIAL ACCOUNT. At the time of dissolution of the Federal Home Loan Bank Board, all such moneys and funds as shall remain in the special deposit account of the Federal Home Loan Bank Board, or other such accounts, shall become the property of the Federal Housing Finance Board. Subtitle B— Federal Home Loan Mortgage Corporation SEC. 731. FEDERAL HOME LOAN MORTGAGE CORPORATION. (a) Statement of Purpose.— (1) In general.— Section 301 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 note) is amended— (A) by inserting “(a)” after the section designation; and (B) by adding at the end the following new subsection: “(b) It is the purpose of the Federal Home Loan Mortgage Corporation— “(1) to provide stability in the secondary market for home mortgages; “(2) to respond appropriately to the private capital market; and “(3) to provide ongoing assistance to the secondary market for home mortgages (including mortgages securing housing for low- and moderate-income families involving a reasonable economic return to the Corporation) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for home mortgage financing.”. (2) Conforming amendment.— The section heading for section 301 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 note) is amended to read as follows: (b) Board of Directors.— (1) New board.— Section 303(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(a)) is amended to read as follows: “(a) (1) There is hereby created the Federal Home Loan Mortgage Corporation, which shall be a body corporate under the direction of a Board of Directors. Within the limitations of law and regulation, the Board of Directors shall determine the general policies that District of Columbia. govern the operations of the Corporation, The principal office of the Corporation shall be in the District of Columbia or at any other place determined by the Corporation. “(2) (A) The Board of Directors of the Corporation shall consist of 18 persons, 5 of whom shall be appointed annually by the President of the United States and the remainder of whom shall be elected annually by the voting common stockholders. The Board of Directors shall at all times have as members appointed by the President of the United States at least 1 person from the homebuilding industry, at least 1 person from the mortgage lending industry, and at least 1 person from the real estate industry. “(B) Each member of the Board of Directors shall be such or elected for a term ending on the date of the next annual meeting of the voting common stockholders. “(C) Any appointive seat on the Board of Directors that becomes vacant shall be filled by appointment by the President of the United States, but only for the unexpired portion of the term. Any elective seat on the Board of Directors that becomes vacant after the annual election of the directors shall be filled by the Board of Directors, but only for the unexpired portion of the term. “(D) Any member of the Board of Directors who is a full-time officer or employee of the Federal Government shall not, as such member, receive compensation for services as such a member.”. (2) Transitional provisions.— (A) Interim board.— (i) Establishment.— There shall be an interim Board of Directors of the Federal Home Loan Mortgage Corporation, which shall serve from the date of the enactment of this Act until the date of the 1st meeting of the voting common shareholders of the Corporation at which the first election of the directors elected by the shareholders occurs. (ii) Members.— The interim Board of Directors of the Federal Home Loan Mortgage Corporation shall consist of— (I) the President of the Corporation; and (II) the persons who were (on the day before the date of the enactment of this Act) the Chairman of the Federal Home Loan Bank Board and the Secretary of Housing and Urban Development (or their designees). (iii) Quorum.— A quorum of the interim Board of Directors of the Federal Home Loan Mortgage Corporation shall consist of a majority of the directors duly serving from time to time. (B) Election of permanent directors.— The first meeting of the voting common shareholders of the Federal Home Loan Mortgage Corporation for election of directors shall occur, under procedures established by the Corporation, within 6 months after the date of the enactment of this Act. (c) Regulatory Power.— Section 303 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452) is amended— (1) by redesignating subsections (b) through (D as subsections (c) through (g), respectively; and (2) by inserting after subsection (a) the following new subsection: “(b) (1) The Secretary of Housing and Urban Development shall have general regulatory power over the Corporation and shall make such rules and regulations as shall be necessary and proper to ensure that the purposes of this title are accomplished. “(2) The Secretary of Housing and Urban Development may require Disadvantaged persons. that a reasonable portion of the mortgage purchases of the Corporation be related to the national goal of providing adequate housing for low- and moderate-income families, but with reasonable economic return to the Corporation. “(3) The aggregate amount of cash dividends paid by the Corporation in any fiscal year on account of any share of its common stock shall not exceed any rate that may be determined from time to time by the Secretary of Housing and Urban Development to be a fair rate of return after consideration of the current earnings and capital condition of the Corporation. “(4) The Secretary of Housing and Urban Development may examine and audit the books and financial transactions of the Corporation and may require the Corporation to issue any reports on its activities that the Secretary determines to be advisable. The Secretary Reports. shall, not later than June 30 of each year, submit to the Congress a report describing the activities of the Corporation under this Act. “(5) The aggregate amount of notes, debentures, or substantially identical types of unsecured obligations outstanding at any time shall not exceed the amount which is 15 times the sum of the Corporation’s capital, capital surplus, general surplus, reserves, and undistributed earnings unless a greater ratio shall be fixed at any time or from time to time by the Secretary of Housing and Urban Development. The outstanding total principal amount of any obligations of the Corporation which are entirely subordinated to the general debt obligations of the Corporation shall be deemed to be capital of the Corporation for the purpose of determining the aggregate amount of notes, debentures, or substantially identical types of unsecured obligations outstanding at any time. “(6) All issuances of stock, and debt obligations convertible into stock, by the Corporation shall be made only with the approval of the Secretary of Housing and Urban Development. “(7) (A) The exercise of the authority of the Corporation pursuant to commitments or otherwise to purchase, service, sell, lend on the security of, or otherwise deal in conventional residential mortgages under section 305(a) shall be subject to the approval of the Secretary of Housing and Urban Development. “(B) Any conventional mortgage programs or activities with respect to purchasing, servicing, selling, lending on the security of, or otherwise dealing in mortgages in which the Corporation has engaged or is engaging as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of Housing and Urban Development as required by this paragraph. “(8) If the Corporation submits to the Secretary of Housing and Reports. Urban Development a request for approval or other action under this title, the Secretary shall, not later than the expiration of the 45-day period following the submission of the request, approve the request or transmit to the Congress a report explaining why the request has not been approved. The period may be extended for an additional 15-day period if the Secretary requests additional information from the Corporation, but the 45-day period may not be extended for any other reason or for any period in addition to or other than the 15-day period. If the Secretary fails to transmit the report to the Congress within the 45-day period or 60-day period, as the case may be, the Corporation may proceed as if the request had been approved.”. (d) Common Stock.— (1) In general.— Section 304(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(a)) is amended to read as follows: “(a) (1) The common stock of the Corporation shall consist of— “(A) non voting common stock, which shall be issued only to Federal home loan banks; and “(B) voting common stock, which shall be issued to such holders in the manner and amount, and subject to any limitations on concentration of ownership, as may be established by the Corporation. “(2) The nonvoting common stock and the voting common stock shall have such par value and other characteristics as the Corporation provides. The voting common stock shall be vested with all voting rights, each share Being entitled to 1 vote. The free transfer-ability of the voting common stock at all times to any person, firm, corporation or other entity shall not be restricted except that, as to the Corporation, it shall be transferable only on the books of the Corporation. Nonvoting common stock of the Corporation shall be evidenced in the manner and shall be transferable only to the extent, to the transferees, and in the manner, provided by the Corporation.”. (2) Conversion of stock.— On the date of the enactment of this Act, each share of outstanding senior participating preferred stock of the Federal Home Loan Mortgage Corporation, with a par value of $2.50 per share, shall be changed into and shall become 1 share of voting common stock of the Corporation. Such voting common stock shall, with respect to the nonvoting common stock of the Corporation, retain all of the rights, priorities and privileges of the senior participating preferred stock. The transformation of the senior participating preferred stock into voting common stock under this paragraph shall be deemed to satisfy the obligation of the Corporation to redeem senior participating preferred stock for non-callable common stock. (3) Conforming amendments.— (A) Subscriptions of federal home loan banks.— Section 304(b) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(b)) is amended by inserting “nonvoting” before “common”. (B) Allocation of subscriptions.— Section 304(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(c)) is amended by striking “such” and by inserting “nonvoting common” before “stock”. (C) Retirement of stock.— Section 304(d) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(d)) is amended by inserting “nonvoting common” before “stock” each place it appears. (e) Mortgage Operations.— (1) Prohibition on fees.— Section 305(a)(1) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(1) is amended by adding at the end the following: “Nothing in this section authorizes the Corporation to impose any charge or fee upon any mortgagee approved by the Secretary of Housing and Urban Development for participation in any mortgage insurance program under the National Housing Act solely because of such status.”. (2) Lending activities.— Section 305(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)) is amended by adding at the end the following new paragraph: “(5) The Corporation is authorized to lend on the security of, and to make commitments to lend on the security of, any mortgage that the Corporation is authorized to purchase under this section. The volume of the Coiporation’s lending activities and the establishment of its loan ratios, interest rates, maturities, and charges or fees in its secondary market operations under this paragraph, shall be determined by the Corporation from time to time; and such determinations shall be consistent with the objectives that the lending activities shall be conducted on such terms as will reasonably prevent excessive use of the Corporation’s facilities, and that the operations of the Corporation under this paragraph shall be within its income derived from such operations and that such operations shall be fully self-supporting. The Corporation shall not be permitted to use its lending authority under this paragraph (A) to advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans. Notwithstanding any Federal, State, or other law to the contrary, the Corporation is hereby empowered, in connection with any loan under this paragraph, whether before or after any default, to provide by contract with the borrower for the settlement or extinguishment, upon default, of any redemption, equitable, legal, or other right, title, or interest of the borrower in any mortgage or mortgages that constitute the security for the loan; and with respect to any such loan, in the event of default and pursuant otherwise to the terms of the contract, the mortgages that constitute such security shall become the absolute property of the Corporation.”. (f) References to FSLIC and FHLBB.— (1) Section 302.— Section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) is amended— (A) in the 4th sentence, by striking out “Federal Savings and Loan Insurance Corporation” and inserting in lieu thereof “Resolution Trust Corporation”; and (B) in the 8th sentence, by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Federal Housing Finance Board”. (2) Section 305.— Section 305 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454) is amended— (A) by striking out “Federal Savings and Loan Insurance Corporation” each place it appears and inserting in lieu thereof “Resolution Trust Corporation”; and (B) in subsection (a)(2), by striking out “Federal Home Loan Bank Board“ and inserting in lieu thereof “Federal Housing Finance Board”. (g) Standby Crédit.— Section 306(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(c)) is amended to read as follows: “(c) (1) The Secretary of the Treasury may purchase any obligations issued under subsection (a). For such purpose, the Secretary may use as a public debt transaction the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under such chapter are extended to include such purpose. “(2) The Secretary of Treasury shall not at any time purchase any obligations under this subsection if the purchase would increase the aggregate principal amount of the outstanding holdings of obligations under this subsection by the Secretary to an amount greater than $2,250,000,000. “(3) Each purchase of obligations by the Secretary of the Treasury under this subsection shall be upon terms and conditions established to yield a rate of return determined by the Secretary to be appropriate, taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the making of the purchase. “(4) The Secretary of the Treasury may at any time sell, upon terms and conditions and at prices determined by the Secretary, any of the obligations acquired by the Secretary under this subsection. “(5) All redemptions, purchases and sales by the Secretary of the Treasury of obligations under this subsection shall be treated as public debt transactions of the United States.”. (h) Preferred Stock.— Section 306(f) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(f)) is amended to read as follows: “(f) The Corporation may have preferred stock on such terms and conditions as the Board of Directors shall prescribe. Any preferred stock shall not be entitled to vote with respect to the election of any member of the Board of Directors.”. (i) Terms of Obligations.— Section 306 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455) is amended by adding at the end the following new subsections: “(j) (1) Any notes, debentures, or substantially identical types of unsecured obligations of the Corporation evidencing money borrowed, whether general or subordinated, shall be issued upon the approval of the Secretary of the Treasury and shall have such maturities and bear such rate or rates of interest as may be determined by the Corporation with the approval of the Secretary of the Treasury. “(2) Any notes, debentures, of substantially identical types of unsecured obligations of the Corporation having maturities of 1 year or less that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 365 days after such date of enactment. “(3) Any notes, debentures, or substantially identical types of unsecured obligations of the Corporation having maturities of more than 1 year that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recov-ery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 60 days after such date of enactment. “(k) (1) Any securities in the form of debt obligations or trust certificates of beneficial interest, or both, and based upon mortgages held and set aside by the Corporation, shall be issued upon the approval of the Secretary of the Treasury and shall have such maturities and shall bear such rate or rates of interest as may be determined by the Corporation with the approval of the Secretary of the Treasury. “(2) Any securities in the form of debt obligations or trust certificates of beneficial interest, or both, and based upon mortgages held and set aside by the Corporation, that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection.”. (j) State Limitations.— (1) The second sentence of section 307(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(a)) is amended to read as follows; “The Corporation is authorized to conduct its business without regard to any qualification or similar statute in any State.”. (2) The amendment made by this subsection shall not apply to 12 USC 1456 note. any assertion of priority by the Federal Home Loan Mortgage Corporation with respect to any cause of action or claim filed before the date of the enactment of this Act. (k) Penal Provisions.— Section 308 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1457) is amended— (1) in subsection (a), by striking the subsection designation; and (2) by striking subsections (b), (c), (d), (e), and (f). (l) Construction.— Section 310 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1459) is amended— (1) in the section heading, by striking “construction and”; and (2) by striking the first sentence. (m) Conforming Amendments to Federal National Mortgage Association Charter Act.— (1) Statement of purpose.— Section 301 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1716) is amended— (A) by striking paragraphs (a) and (b) and inserting the following new paragraphs; “(1) provide stability in the secondary market for home mortgages; “(2) respond appropriately to the private capital market; “(3) provide ongoing assistance to the secondary market for home mortgages (including mortgages securing housing for low- and moderate-income families involving a reasonable economic return) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for home mortgage financing; and”; and (B) by redesignating paragraph (c) as paragraph (4). (2) Lending activities.— Section 304(a)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719(a)(2)) is amended— (A) by inserting after the 3rd sentence the following new sentence: “The corporation shall not be permitted to use its lending authority (A) to advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans.”; and (B) by striking the 1st and 2d sentences. (3) Audits by gao.— Section 309 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a) is amended by adding at the end the following new subsection: “(j) The mortgage transactions of the corporation may be subject to audit by the Comptroller General of the United States in accordance with the principles and procedures applicable to commercial corporation transactions under such rules and regulations as may be prescribed by the Comptroller General. The representatives of the General Accounting Office shall have access to such books, accounts, financial records, reports, files, and such other papers, things, or property belonging to or in use by the corporation and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by Reports. depositories, fiscal agents, and custodians. A report on each such audit shall be made by the Comptroller General to the Congress. The corporation shall reimburse the General Accounting Office for the full cost of any such audit as billed therefor by the Comptroller General.”. Subtitle C— Technical and Conforming Amendments SEC. 741. REPEAL OF LIMITATION OF OBLIGATION FOR ADMINISTRATIVE EXPENSES. Section 7(b) of the First Deficiency Appropriation Act of 1936 (15 U.S.C. 712a(b)) is amended by striking the following: “(1) Federal Home Loan Bank Board;”; “(2) Home Owners’ Loan Corporation;”; and “(11) Federal Savings and Loan Insurance Corporation;”. SEC. 742. AMENDMENT OF TITLE 5, UNITED STATES CODE. (a) Executive Schedule.— (1) Section 5314 of title 5, United States Code (5 U.S.C. 5315) is amended— (A) by striking “Chairman of the Federal Home Loan Bank Board.”; and (B) by adding at the end thereof the following: “Director of the Office of Thrift Supervision. “Chairperson of the Federal Housing Finance Board.”. (2) Section 5315 of title 5, United States Code (5 U.S.C. 5315) is amended— (A) by striking out “Members, Federal Home Loan Bank Board.”, and (B) by inserting “Directors, Federal Housing Finance Board ”. (b) Limitation on Pay Fixed by Administrative Action.— Section 5373(2) of title 5, United States Code, is amended by inserting after “481,” the following: “1437, 1439,”. (c) Definition of Agency.— Section 3132(a)(1) of title 5, United States Code (5 U.S.C. 3132(a)(1), is amended— (1) in subparagraph (B), by striking “or” after the semicolon; (2) in subparagraph (C), by inserting “or” after the semicolon; and (3) by adding at the end the following: “(D) the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Housing Finance Board, the Resolution Trust Corporation, and the National Credit Union Administration;”. SEC. 743. AMENDMENT OF BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT PROVISIONS. (a) Section 255(g)(1)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended— (1) by inserting after the item relating to the Comptroller of the Currency the following new item: “Director of the Office of Thrift Supervision;”; (2) by striking out “Federal Home Loan Bank Board;” and inserting in lieu thereof the following new items: “Federal Deposit Insurance Corporation, Bank Insurance Fund; “Federal Deposit Insurance Corporation, FSLIC Resolution Fund; “Federal Deposit Insurance Corporation, Savings Association Insurance Fund;”; (3) by striking out “Federal Home Loan Bank Board, Federal Savings and Loan Insurance Corporation” and inserting in lieu thereof “Federal Housing Finance Board”; and (4) by inserting after the item relating to the Postal service fund the following new items: “Resolution Funding Corporation; “Resolution Trust Corporation;”. (b) Section 256(b)(4) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 256(b)(4)) is amended— 2 USC 906. (1) by striking out subparagraph (C) and inserting in lieu thereof the following new subparagraph “(C) Office of Thrift Supervision.”; (2) by striking subparagraph (D) and inserting in lieu thereof the following new subparagraph: “(D) Office of Thrift Supervision.”; and (3) by adding at the end thereof the following new subparagraphs: “(H) Resolution Funding Corporation. “(I) Resolution Trust Corporation.”. (c) Section 255(g)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985 is amended by striking “Federal Savings and Loan Insurance Corporation fund (82–4037–0–3–371);”. SEC. 744. CONFORMING AMENDMENTS TO FINANCIAL INSTITUTION RELATED ACTS. (a) Federal Financial Institutions Examination Council Act.— (1) Section 1003.— Section 1003 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3302) is amended— (A) in paragraph (1), by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Office of Thrift Supervision”; and (B) in paragraph (3), by striking out “savings and loan association” and inserting in lieu thereof “savings association”. (2) Section 1004.— Section 1004(a)(4) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3303(a)(4)) is amended by striking out “Chairman of the Federal Home Loan Bank Board, and” and inserting in lieu thereof “Director, Office of Thrift Supervision”. (3) Section 1006.— Section 1006(d) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3305(d)) is amended in the 2d sentence by inserting “and employees of the Federal Housing Finance Board” after “supervisoiy agencies”. (b) Right to Financial Privacy Act.— Section 1101 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401) is amended— (1) in paragraph (1), by striking out “savings and loan” and inserting in lieu thereof “savings association”; (2) in paragraph (6), by striking out subparagraph (B) and redesignating the remaining subparagraphs as subparagraphs (B) through (H), respectively; and (3) in paragraph (6)(B) (as so redesignated), by striking out “the Federal Home Loan Bank Board” and inserting in lieu thereof “Director, Office of Thrift Supervision”. (c) Alternative Mortgage Transactions Parity Act.— The Alternative Mortgage Transactions Parity Act of 1982 (12 U.S.C. 3801–06) is amended by striking out “Federal Home Loan Bank Board” each place such term appears and inserting in lieu thereof “Director of the Office of Thrift Supervision”. (d) Expedited Funds Availability Act.— Section 610(a)(2) of the Expedited Funds Availability Act (12 U.S.C. 4009(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision in the case of savings associations the deposits of which are insured by the Federal Deposit Insurance Corporation; and”. (e) Paperwork Reduction Act.— Section 2(a)(10) of the Paperwork Reduction Act of 1980 (44 U.S.C. 3502(a)(10)) is amended by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “the Federal Housing Finance Board”. (f) Federal Property and Administrative Services Act.— Section 602(11) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 474(11)) is amended— (1) by inserting “or the Resolution Trust Corporation” after “Department of Housing and Urban Development”; (2) by striking out “savings and loan accounts” and inserting in lieu thereof “savings association accounts”; and (3) by inserting “under the Federal Deposit Insurance Act or any other law.” after “National Housing Act”. (g) Public Buildings Act.— Section 13(4) of the Public Buildings Act of 1959 (40 U.S.C. 612(d)) is amended by striking out subparagraph (D). (h) Bank Protection Act.— Section 2 of the Bank Protection Act of 1968 (12 U.S.C. 1881) is amended— (1) in paragraph (4), by— (A) striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Director of the Office of Thrift Supervision”; (B) striking out “and loan”; and (C) striking “associations” and all that follows through “Corporation”; and (2) in paragraph (3), by inserting “and State savings associations” before “, and”. (i) The Federal Reserve Act.— (1) Section 11.— Section 11(a)(2) of the Federal Reserve Act (12 U.S.C. 248(a)(2)) is amended by striking “(iii) Federal Home Loan Bank Board in the case of any institution insured by the Federal Savings and Loan Insurance Corporation” and inserting “(iii) the Director of the Office of Thrift Supervision in the case of any savings association which is an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act)”. (2) Section 19(b).— Section 19(b)(1)(A)(vi) of the Federal Reserve Act (12 U.S.C. 461(b)(1)(A)(vi)) is amended to read as follows: “(vi) any savings association (as defined in section 3 of the Federal Deposit Insurance Act) which is an insured depository institution (as defined in such Act) or is eligible to apply to become an insured depository institution under the Federal Deposit Insurance Act; and”. (3) Section 19.— Section 19 of the Federal Reserve Act (12 U.S.C. 461) is amended by striking out “the Federal Home Loan Bank Board,” and inserting in lieu thereof “the Director of the Office of Thrift Supervision,” each place it appears. (j) Public Law 93–495.— Section 3 of title I of Public Law 93–495 (12 U.S.C. 250) is amended by striking “Federal Home Loan Bank Board” and inserting “Director of the Office of Thrift Supervision”. (k) Truth in Lending Act.— Section 108(a)(2) of the Truth in Lending Act (15 U.S.C. 1607(a)(2)) is amended to read as follows: (2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (l) Fair Credit Reporting Act.— Section 621(b)(2) of the Fair Credit Reporting Act (15 U.S.C. 1681s(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (m) Equal Credit Opportunity Act.— Section 704(a)(2) of the Equal Credit Opportunity Act (15 U.S.C. 1691c(a)(2)) is amended to read as follows: “(2) Section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (n) Fair Debt Collection Practices Act.— Section 814(b)(2) of the Fair Debt Collection Practices Act (15 U.S.C. 1692/(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (o) Electronic Fund Transfer Act.— Section 917(a)(2) of the Electronic Fund Transfer Act (15 U.S.C. 1693o(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (p) Home Mortgage Disclosure Act of 1975.— (1) Section 305.— Section 305(b)(2) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2804(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation; and”. (2) Section 306.— Section 306(b)(2) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2805(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (3) Section 307.— Section 307 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2806) is amended by striking “Federal Home Loan Bank Board” each place it appears and inserting “Director of the Office of Thrift Supervision”. (q) Community Reinvestment Act of 1977.— Section 803(1)(D) of the Community Reinvestment Act of 1977 (12 U.S.C. 2902(1)(D)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and a savings and loan holding company;”. (r) Depository Institutions Management Interlocks Act.— (1) Section 207(4) of the Depository Institutions Management Interlocks Act (12 U.S.C. 3206(4)) is amended to read as follows: “(4) the Director of the Office of Thrift Supervision with respect to a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and savings and loan holding companies,”. (s) Depository Institutions Deregulation Act of 1980.— Section 208(a)(2) of the Depository Institutions Deregulation Act of 1980 (12 U.S.C. 3507(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (t) Federal Trade Commission Act.— Section 18(f)(3) of the Federal Trade Commission Act (Ifî U.S.C. 57a(f)(3)) is amended to read as follows: “(3) Compliance with regulations prescribed under this subsection shall be enforced under section 8 of the Federal Deposit Insurance Act with respect to savings associations as defined in section 3 of the Federal Deposit Insurance Act.”, (u) Securities Exchange Act of 1934.— (1) Section 3.— Section 3(a)(34) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(34)) is amended— (A) in subparagraph (G)— (i) by striking clauses (iv) and (v) and inserting the following: “(iv) the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”; and (ii) by redesignating clause (vi) as clause (v); and (B) in the second sentence, by striking “the Federal Home Loan Bank Board” and inserting “the Office of Thrift Supervision”. (2) Section 12.— Section 12(i) of the Securities Exchange Act of 1934 (15 U.S.C. 78/(i)) is amended— (A) in the first sentence— (i) by inserting “and savings associations” after “banks” the first place it appears; (ii) by striking “or institutions the accounts of which are insured by the Federal Savings and Loan Insurance Corporation”; and (iii) by striking paragraph (4) and inserting “(4) with respect to savings associations the accounts of which are insured by the Federal Deposit Insurance Corporation are vested tn the Office of Thrift Supervision”; and (B) in the second sentence, by striking “the Federal Home Loan Bank Board” and inserting “the Office of Thrift Supervision”. (5) Section 15.— Section 15C(f)(1) (15 U.S.C. 78o-5(f)(1)) of such Act is amended by striking “Federal Home Loan Bank Board” and inserting “Director of the Office of Thrift Supervision”.

15. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 706(1) · 103 Stat. 183

    Redesignated · 12 U.S.C. § 1426(c); 12 U.S.C. § 1426(d)

    Pub. L. 101–73, § 706(1), redesignated subsecs. (d) and (h) as (c) and (d), respectively. Former subsec. (c) redesignated (b)

    Source evidence

    Code amendment note
    Subsecs. (c), (d). Pub. L. 101–73, § 706(1), redesignated subsecs. (d) and (h) as (c) and (d), respectively. Former subsec. (c) redesignated (b).

    Enacted provision · exact public law section
    (1) by striking subsections (a), (e), (f), and (g) and redesignating subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), (b), (c), (d), (e), (f), (g), and (h), respectively;

16. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 710(b)(3) · 103 Stat. 183

    Struck · 12 U.S.C. § 1426(e)

    Pub. L. 101–73, § 710(b)(3), which directed amendment of subsec. (e) by striking out “or deprive any nonmember borrower of the privilege of further advances,” after “remove any member from membership,” was executed by striking “or deprive any nonmember borrower of the privilege of obtaining further advances,” as the probable intent of Congress

    Source evidence

    Code amendment note
    Subsec. (e). Pub. L. 101–73, § 710(b)(3), which directed amendment of subsec. (e) by striking out “or deprive any nonmember borrower of the privilege of further advances,” after “remove any member from membership,” was executed by striking “or deprive any nonmember borrower of the privilege of obtaining further advances,” as the probable intent of Congress.

    Enacted provision · exact public law section
    (3) in section 6(e) (as redesignated by section 706 of this Act), by striking “or deprive any non member borrower of the privilege of further advances,”;

17. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 710(b)(2) · 103 Stat. 183

    Struck · 12 U.S.C. § 1426(e)

    Pub. L. 101–73, § 710(b)(2), struck out “or nonmember borrower” after “such member” wherever appearing

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 101–73, § 710(b)(2), struck out “or nonmember borrower” after “such member” wherever appearing.

    Enacted provision · exact public law section
    (2) in section 6(e) (as redesignated by section 706 of this Act), by striking “or nonmember borrower” wherever it appears;

18. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 706(2) · 103 Stat. 183

    Substituted · 12 U.S.C. § 1426(e)

    Pub. L. 101–73, § 706(2), substituted “If any member’s membership in a Federal Home Loan Bank is terminated, the indebtedness of such member to the Federal Home Loan Bank shall be liquidated in an orderly manner (as determined by the Federal Home Loan Bank), and upon completion of such liquidation, the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled. Any such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties or other fees applicable to such prepayment.” for “In any such case, the indebtedness of such member or nonmember borrower to the Federal Home Loan Bank shall be liquidated, and the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled, except that in the case of a voluntary withdrawal, such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties applicable to such prepayment.”

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 101–73, § 706(2), substituted “If any member’s membership in a Federal Home Loan Bank is terminated, the indebtedness of such member to the Federal Home Loan Bank shall be liquidated in an orderly manner (as determined by the Federal Home Loan Bank), and upon completion of such liquidation, the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled. Any such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties or other fees applicable to such prepayment.” for “In any such case, the indebtedness of such member or nonmember borrower to the Federal Home Loan Bank shall be liquidated, and the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled, except that in the case of a voluntary withdrawal, such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties applicable to such prepayment.”

    Enacted provision · exact public law section
    (2) by striking the second sentence of subsection (e) (as redesignated by paragraph (1) of this section) and inserting the following: “If any member’s membership in a Federal Home Loan Bank is terminated, the indebtedness of such member to the Federal Home Loan Bank shall be liquidated in an orderly manner (as determined by the Federal Home Loan Bank), and upon completion of such liquidation, the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled. Any such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties or other fees applicable to such prepayment.”; and

19. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 title VII · 103 Stat. 183

    1. Redesignated · 12 U.S.C. § 1426(e)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), redesignated subsec. (i) as (e)

    2. Substituted · 12 U.S.C. § 1426(e)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), substituted “Board” for “board” wherever appearing

    3. Struck · 12 U.S.C. § 1426(e)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), struck out former subsec. (e) which related to loans to institutions not authorized to subscribe to stock

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), redesignated subsec. (i) as (e), substituted “Board” for “board” wherever appearing, and struck out former subsec. (e) which related to loans to institutions not authorized to subscribe to stock.

    Enacted provision · exact public law
    TITLE VII— FEDERAL HOME LOAN BANK SYSTEM REFORMS Subtitle A— Federal Home Loan Bank Act Amendments SEC. 701. DEFINITIONS. (a) In General.— Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is amended— (1) by striking paragraphs (1) and (2) and inserting the following: “(1) Board.— The term ‘Board’ means the Federal Housing Finance Board established under section 2A. “(2) (A) Bank.— The term ‘Federal Home Loan Bank’ or ‘Bank’ means a bank established under the authority of the Federal Home Loan Bank Act. “(B) Bank system.— The term ‘Federal Home Loan Bank System’ means the Federal Home Loan Banks under the supervision of the Board.”; (2) in paragraph (4) by striking “(except when used in reference to the member of the Board)”; and (3) by striking paragraph (9) and adding at the end the following: “(9) Savings association.— The term ‘savings association’ has the meaning given to such term in section 3 of the Federal Deposit Insurance Act. “(10) Chairperson.— The term ‘Chairperson’ means the Chairperson of the Board. “(11) Secretary.— The term ‘Secretary’ means the Secretary of Housing and Urban Development. “(12) Insured depository institution.— The term ‘insured depository institution’ means— “(A) an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act), and “(B) except as used in sections 21A and 21B, an insured credit union (as defined in section 101 of the Federal Credit Union Act).”. (b) Change in Terms.— (1) In general— Except as otherwise specifically provided in 12 USC 1421 et seq. this title, the Federal Home Loan Bank Act is amended by striking “board” (other than in section 7) and “Federal Home Loan Bank Board” each place such terms appear and inserting “Board”. (2) Chairperson.— The Federal Home Loan Bank Act is amended by striking “Chairman” and “chairman” each place such terms appear and inserting “Chairperson” and “chairperson”. (3) Exceptions.— (A) General rule.— The amendments made by paragraph (1) shall not apply to sections 18(c), 21A, and 21B of the Federal Home Loan Bank Act. (B) Conforming amendment.— Section 18(c) of the Federal Home Loan Bank Act (12 U.S.C. 1438(c)) is amended by striking “Federal Home Loan Bank Board” and “board” each place such terms appear and inserting “Director of the Office of Thrift Supervision”. (c) Technical Amendments — Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended— (1) in subsection (e)(2)(C), by inserting “Federal Home Loan” before “Banks,”; and (2) in the first sentence of the third paragraph of subsection (i) by inserting “Federal” before “Home Loan Bank System”. SEC. 702. FEDERAL HOUSING FINANCE BOARD ESTABLISHED. (a) In General.— The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended by inserting after section 2 the following new sections: “SEC. 2A. FEDERAL HOUSING FINANCE BOARD. “(a) Establishment.— “(1) In general.— There is established the Federal Housing Finance Board, which shall succeed to the authority of the Federal Home Loan Bank Board with respect to the Federal Home Loan Banks. “(2) Status.— The Board shall be an independent agency in the executive branch of the Government. “(3) Duties.— The duties of the Board shall be— “(A) to supervise the Federal Home Loan Banks, “(B) to ensure that the Federal Home Loan Banks carry out their housing finance mission, “(C) to ensure the Federal Home Loan Banks remain adequately capitalized and able to raise funds in the capital markets, and “(D) to ensure the Federal Home Loan Banks operate in a safe and sound manner. “(b) Management.— “(1) In general.— The management of the Board shall be vested in a Board of Directors consisting of 5 directors as follows: “(A) The Secretary who shall serve without additional compensation. “(B) Four citizens of the United States, appointed by the President, by and with the advice and consent of the Senate, each of whom shall hold office for a term of 7 years. “(2) Provisions relating to appointed directors.— “(A) In general.— The directors appointed pursuant to paragraph (1)(B) shall be from among persons with extensive experience or training in housing finance or with a commitment to providing specialized housing credit. An appointed director shall not hold any other appointed office during his or her term as director. Not more than 3 directors shall be members of the same political party. Not more than 1 appointed director shall be from any single district of the Federal Home Loan Bank System. Nominations pursuant to this subparagraph shall be referred in the Senate to the Committee on Banking, Housing, and Urban Affairs. “(B) Consumer representative.— At least 1 director shall be chosen from an organization with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections. “(C) Limitations on conflicts of interest.— No director may— “(i) serve as a director or officer of any Federal Home Loan Bank or any member of any Bank; or “(ii) hold shares of, or any other financial interest in, any member of any such Bank. “(3) Initial terms.— Notwithstanding paragraph (2), of the directors first appointed— “(A) one shall be appointed for a term of 1 year; “(B) one shall be appointed for a term of 3 years; and “(C) one shall be appointed for a term of 5 years. “(c) Chairperson; Transitional Provisions.— “(1) In general.— The President shall designate 1 of the appointed directors to be the Chairperson of the Board. The Chairperson shall designate another director to serve as Acting Chairperson during the absence or disability of the Chairperson. “(2) Transitional provision.— Beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, until such time that at least 2 directors are appointed and confirmed pursuant to subsection (b), the Secretary shall act for all purposes and with the full powers of the Board of Directors. The Secretary may utilize the services of employees from the Department of Housing and Urban Development to perform services for the Board of Directors during such transition period. “(d) Vacancies.— “(1) In general.— Any vacancy on the Board of Directors shall be filled in the manner in which the original appointment was made. Any director appointed to fill a vacancy occurring before the expiration of the term for which such director’s predecessor was appointed shall be appointed only for the remainder of such term. Each director may continue to serve until a successor has been appointed and qualified. “(2) The secretary.— In the event of a vacancy in the office of Secretary or during the absence or disability of the Secretary, the Acting Secretary shall act as a director in place of the Secretary. “SEC. 2B. POWERS AND DUTIES. “(a) General Powers.— -The Board shall have the following powers: “(1) To supervise the Federal Home Loan Banks and to promulgate and enforce such regulations and orders as are necessary from time to time to carry out the provisions of this Act. “(2) To suspend or remove for cause a director, officer, employee, or agent of any Federal Home Loan Bank or joint office. The cause of such suspension or removal shall be communicated in writing to such director, officer, employee, or agent and to such Bank or joint office. Notwithstanding any other provision of this Act, no officer, employee, or agent of a Bank or joint office shall be a Federal officer or employee under any definition of either term in title 5, United States Code. “(3) To determine necessary expenditures of the Board under this Act and the manner in which such expenditures shall be incurred, allowed, and paid. “(4) To use the United States mails in the same manner and under the same conditions as a department or agency of the United States. “(b) Staff.— “(1) Board staff.— Subject to title IV of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board may employ, direct, and fix the compensation and number of employees, attorneys, and agents of the Federal Housing Finance Board, except that in no event shall the Board delegate any function to any employee, administrative unit of any Bank, or joint office of the Federal Home Loan Bank System. The prohibition contained in the preceding sentence shall not apply to the delegation of ministerial functions including issuing consolidated obligations pursuant to section 11(b). In directing and fixing such compensation, the Board shall consult with and maintain comparability with the compensation at the Federal bank regulatory agencies. Such compensation shall be paid without regard to the provisions of other laws applicable to officers or employees of the United States, except the Chairperson and other Directors shall be compensated as prescribed in sections 5314 and 5315 of title 5, United States Code, respectively. “(2) Abolition of joint offices.— The joint or collective offices of the Federal Home Loan Bank System, except for the Office of Finance, are hereby abolished. “(c) Receipts of the Board.— Receipts of the Board derived from assessments levied upon the Federal Home Loan Banks and from other sources (other than receipts from the sale of consolidated Federal Home Loan Bank bonds and debentures issued under section 11 of this Act) shall be deposited in the Treasury of the United States. Salaries of the directors and other employees of the Board and all other expenses thereof may be paid from such assessments or other sources and shall not be construed to be Government Funds or appropriated monies, or subject to apportionment for the purposes of chapter 15 of title 31, United States Code, or any other authority. “(d) Annual Report.— The Board shall make an annual report to the Congress.”. (b) Audits and Reports.— Section 20 of the Federal Home Loan Bank Act (12 U.S.C. 1440) is amended by adding at the end the following: “In addition to such examinations, the Comptroller General may audit or examine the Board and the Banks, to determine the extent to which the Board and the Banks are fairly and effectively fulfilling the purposes of this Act.”. (c) Appointment of Inspector General.— Section 8E(a)(2) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking “Federal Home Loan Bank Board,“ and inserting “Federal Housing Finance Board,”. SEC. 703. TERMINATION OF THE FEDERAL HOME LOAN BANK BOARD. (a) In General.— Section 17 of the Federal Home Loan Bank Act (12 U.S.C. 1437) is hereby repealed. SEC. 704. ELIGIBILITY FOR MEMBERSHIP. (a) Insured Depository Institutions.— Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 1424(a)) is amended to read as follows: “(a) Criteria for Eligibility.— “(1) In general.— Any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, savings bank, or any insured depository institution (as defined in section 2 of this Act), shall be eligible to become a member of a Federal Home Loan Bank if such institution— “(A) is duly organized under the laws of any State or of the United States; “(B) is subject to inspection and regulation under the banking laws, or under similar laws, of the State or of the United States; and “(C) makes such home mortgage loans as, in the judgment of the Board, are long-term loans (except that in the case of a savings bank, this subparagraph applies only if, in the judgment of the Board, its time deposits, as defined in section 19 of the Federal Reserve Act, warrant its making such loans). “(2) Qualified thrift lender.— An insured depository institution that is not a member on January 1, 1989, may become a member of a Federal Home Loan Bank only if— “(A) the insured depository institution has at least 10 percent of its total assets in residential mortgage loans; “(B) the insured depository institution’s financial condition is such that advances may be safely made to such institution; and “(C) the character of its management and its home-financing policy are consistent with sound and economical home financing. An insured depository institution commencing its initial business operations after January I, 1989, may become a member of a Federal Home Loan Bank if it complies with regulations and orders prescribed by the Board for the 10 percent asset requirement (described in the preceding sentence) within one year after the commencement of its operations.”. (c) Repeal of Section 27.— Section 27 of the Federal Home Loan Bank Act (12 U.S.C. 1447) is hereby repealed. SEC. 705. REPEAL OF PROVISION RELATING TO RATE OF INTEREST ON DEPOSITS. Section 5B of the Federal Home Loan Bank Act (12 U.S.C. 1425b) is hereby repealed. SEC. 706. CAPITAL STOCK. Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426) is amended— (1) by striking subsections (a), (e), (f), and (g) and redesignating subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), (b), (c), (d), (e), (f), (g), and (h), respectively; (2) by striking the second sentence of subsection (e) (as redesignated by paragraph (1) of this section) and inserting the following: “If any member’s membership in a Federal Home Loan Bank is terminated, the indebtedness of such member to the Federal Home Loan Bank shall be liquidated in an orderly manner (as determined by the Federal Home Loan Bank), and upon completion of such liquidation, the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled. Any such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties or other fees applicable to such prepayment.”; and (3) in subsection (h) (as redesignated by paragraph (1) of this section), by striking “charter” and all that follows through the end period and inserting “charter as a Federal savings association (as defined in section 3 of the Federal Deposit Insurance Act).”. SEC. 707. ELECTION OF BANK DIRECTORS. Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is amended— (1) in subsection (a)— (A) by striking “appointed by the Federal Home Loan Bank Board referred to in subsection (b) of section 17, hereinafter in this section referred to as the Board” and inserting “appointed by the Board referred to in section 2A”, (B) by inserting after the last sentence the following: “At least 2 of the Federal Home Loan Bank directors who are appointed by the Board shall be representatives chosen from organizations with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections. No Federal Home Loan Bank director who is appointed pursuant to this subsection may, during such Bank director’s term of office, serve as an officer of any Federal Home Loan Bank or a director or officer of any member of a Bank, or hold shares, or any other financial interest in, any member of a Bank.”; (2) by inserting after the first sentence of subsection (b) the following: “No person who is an officer or director of a member that fails to meet any applicable capital requirement is eligible to hold the office of Federal Home Loan Bank director.”; (3) by amending subsection (f) to read as follows: “(f) Vacancies.— “(1) In general.— A Bank director appointed or elected to fill a vacancy shall be appointed or elected for the unexpired term of his or her predecessor in office. “(2) Appointed bank directors.— In the event of a vacancy in any appointive Bank directorship, such vacancy shall be filled through appointment by the Board for the unexpired term. If any appointive Bank director shall cease to have the qualifications set forth in subsection (a), the office held by such person shall immediately become vacant, but such person may continue to act as a Bank director until his or her successor assumes the vacated office or the term of such office expires, whichever occurs first. “(3) Elected bank directors.— In the event of a vacancy in any elective Bank directorship, such vacancy shall be filled by an affirmative vote of a majority of the remaining Bank directors, regardless of whether such remaining Bank directors constitute a quorum of the Bank’s board of directors. A Bank director so elected shall satisfy the requirements for eligibility which were applicable to his predecessor. If any elective Bank director shall cease to have any qualification set forth in this section, the office held by such person shall immediately become vacant, and such person shall not continue to act as a Bank director.”; and (4) by adding at the end the following new subsection: “(k) Indemnification of Directors, Officers, and Employees.— The board of directors of each Bank shall determine the terms and conditions under which such Bank may indemnify its directors, officers, employees or agents.”. SEC. 708. REPEAL OF PROVISIONS RELATING TO CERTAIN POWERS OF THE FEDERAL HOME LOAN BANK BOARD. Section 19 of the Federal Home Loan Bank Act (12 U.S.C. 1439) is hereby repealed. SEC. 709. POWERS AND DUTIES OF BANKS. Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended— (1) in subsection (e)(1), by inserting “incidental to activities” after “not”; (2) in subsection (f), by striking out “or whenever in the judgment of at least 4 members of the board an emergency exists requiring such action”; (3) by amending subsection (k) to read as follows: “(k) Bank Loans to SAIF.— “(1) Loans authorized.— Subject to paragraph (3), the Federal Home Loan Banks may, upon the request of the Federal Deposit Insurance Corporation, make loans to such Corporation for the use of the Savings Association Insurance Fund. “(2) Liability of the fund.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall be a direct liability of the Savings Association Insurance Fund. “(3) Interest on and security for such loans.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall— “(A) bear a rate of interest not less than such Bank’s current marginal cost of funds, taking into account the maturities involved; and “(B) be adequately secured.”. SEC. 710. ELIGIBILITY OF BORROWERS TO SECURE ADVANCES. (a) In General.— Section 9 of the Federal Home Loan Bank Act (12 U.S.C. 1429) is amended by striking “or nonmember borrower” in the first sentence. (b) Conforming Amendments.— The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended— (1) in sections 2(5) and 4(b), by striking “or a nonmember borrower” wherever it appears; (2) in section 6(e) (as redesignated by section 706 of this Act), by striking “or nonmember borrower” wherever it appears; (3) in section 6(e) (as redesignated by section 706 of this Act), by striking “or deprive any non member borrower of the privilege of further advances,”; (4) in sections 7Q) and 10(c), by striking “or nonmember borrower” wherever it appears; (5) in section 10(c), by striking “, or made to a nonmember borrower” in the second sentence; and (6) in sections 11(g) and 11(h), by striking “or nonmember borrowers” wherever it appears. (c) Community Support.— Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) is amended by adding at the end the following: “(g) Community Support Requirements.— “(1) In general.— Before the end of the 2-year period beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board shall adopt regulations establishing standards of community investment or service for members of Banks to maintain continued access to long-term advances. “(2) Factors to be included.— The regulations promulgated pursuant to paragraph (1) shall take into account factors such as a member’s performance under the Community Reinvestment Act of 1977 and the member’s record of lending to first-time homebuyers.”. SEC. 711. ADMINISTRATIVE EXPENSES. Section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 1437(b)) is amended to read as follows: 12 USC 1438. “(b) Assessments for Administrative Expenses.— “(1) In general.— The Board may impose a semiannual assessment on the Federal Home Loan Banks, the aggregate amount of which is sufficient to provide for the payment of the Board’s estimated expenses for the period for which such assessment is made. “(2) Deficiencies.— If, at any time, amounts available from any assessment for any semiannual period are insufficient to cover the expenses of the Board incurred in carrying out the provisions of this Act during such period, the Board may make an immediate assessment against the Banks to cover the amount of the deficiency for such semiannual period. “(3) Surpluses.— If, at the end of any semiannual period for which an assessment is made, any amount remains from such assessment, such amount will be deducted from the assessment on the Banks by the Board for the following semiannual period. “(4) Transition provision.— On or after the effective date of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board may levy a one-time special assessment on the Banks pursuant to this subsection for the Board’s estimated expenses for the transitional period following enactment of such Act, if such assessment is made before the Board’s first semiannual assessment under paragraph (1).”. SEC. 712. NONADMINISTRATIVE EXPENSES. Subsection (a) of section 18 of the Federal Home Loan Bank Act (12 U.S.C. 1438(a)) and section 19A of such Act (12 U.S.C. 1439–1) are hereby repealed. SEC. 713. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION INDUSTRY ADVISORY COMMITTEE. Subsection (i) of section 21 of the Federal Home Loan Bank Act (12 U.S.C. 1441) is repealed and subsections (i), (k), and (1) are redesignated subsections (i), (j), and (k), respectively. SEC. 714. ADVANCES. (a) In General.— Subsection (a) of section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430(a)) is amended by striking everything after “members” to the end period and inserting the following “upon collateral sufficient, in the judgment of the Bank, to fully secure advances obtained from the Bank under this section or section 11(g) of this Act. All long-term advances shall only be made for the purpose of providing funds for residential housing finance. A Bank, at the time of origination or renewal of a loan or advance, shall obtain and maintain a security interest in collateral eligible pursuant to one or more of the following categories: “(1) Fully disbursed, whole first mortgages on improved residential property (not more than 90 days delinquent), or securities representing a whole interest in such mortgages. “(2) Securities issued, insured, or guaranteed by the United States Government or any agency thereof (including without limitation, mortgage-backed securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Corporation, and the Government National Mortgage Association). “(3) Deposits of a Federal Home Loan Bank. “(4) Other real estate related collateral acceptable to the Bank if such collateral has a readily ascertainable value and the Bank can perfect its interest in the collateral. The aggregate amount of outstanding advances secured by such other real estate related collateral shall not exceed 30 percent of such member’s capital. “(5) Paragraphs (1) through (4) shall not affect the ability of any Federal Home Loan Bank to take such steps as it deems necessary to protect its security position with respect to outstanding advances, including requiring deposits of additional collateral security, whether or not such additional security would be eligible to originate an advance. If an advance existing on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 matures and the member does not have sufficient eligible collateral to fully secure a renewal of such advance, a Bank may renew such advance secured by such collateral as the Bank and the Board determines is appropriate. A member that has an advance secured by such insufficient eligible collateral must reduce its level of outstanding advances promptly and prudently in accordance with a schedule determined by the Board.“. (b) Reduced Eligibility for Advances.— Section 10(e) of the Federal Home Loan Bank Act (12 U.S.C. 1430(e)) is amended to read as follows: “(e) Qualified Thrift Lender Status.— “(1) In general.— A member that is not a qualified thrift lender may only receive an advance if it holds stock in its Federal Home Loan Bank at the time it receives that advance in an amount equal to at least— “(A) 5 percent of that member’s total advances, divided by “(B) such member’s actual thrift investment percentage. Such members that are not qualified thrift lenders may only apply for advances under this section for the purpose of obtaining funds for housing finance. “(2) Priority.— The Board, by regulation, shall establish a priority for advances to members that are qualified thrift lenders. The aggregate amount of any Bank’s advances to members that are not qualified thrift lenders shall not exceed 30 percent of a Bank’s total advances. “(3) Minimum stock purchase requirement for membership.— Each member of a Federal Home Loan Bank shall, at a minimum, purchase and maintain stock in its Federal Home Loan Bank in the amount that would be required under section 6(b) if at least 30 percent of such member’s assets were home mortgage loans. “(4) Exceptions.— Paragraphs (1) and (2) of this subsection do not apply to— “(A) a savings bank as defined in section 3 of the Federal Deposit Insurance Act; or “(B) a Federal savings association in existence as a Federal savings association on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989— “(i) that was chartered as a savings bank or cooperative bank prior to October 15, 1982; or “(ii) that acquired its principal assets from an institution which was chartered prior to October 15, 1982, as a savings bank or cooperative bank under State law. “(5) Definitions.— As used in this subsection— “(A) Savings association.— The term ‘savings association’ has the same meaning as in section 10(a)(1)(A) of the Home Owners’ Loan Act. “(B) Qualified thrift lender.— The term ‘qualified thrift lender’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act. “(C) Actual thrift investment percentage.— The term ‘actual thrift investment percentage’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act.”. (c) Special Liquidity Advances.— Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as amended by section 710(c) of this Act) is amended by adding at the end the following new subsection: “(h) Special Liquidity Advances.— “(1) In general.— Subject to paragraph (2), the Federal Home Loan Banks may, upon the request of the Director of the Office of Thrift Supervision, make short-term liquidity advances to a savings association that— “(A) is solvent but presents a supervisory concern because of such association’s poor financial condition; and “(B) has reasonable and demonstrable prospects of returning to a satisfactory financial condition. “(2) Interest on and security for special liquidity advances.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall be subject to all applicable collateral requirements, including the requirements of section 10(a) of this Act, and shall be at an interest rate no less favorable than those made available for similar short-term liquidity advances to savings associations that do not present such supervisory concern.”. SEC. 715. AMENDMENTS RELATING TO WITHDRAWAL FROM FEDERAL HOME LOAN BANK MEMBERSHIP. Section 6(h) of the Federal Home Loan Bank Act (as redesignated by section 706 of this Act) is amended by striking “five” and inserting “10”. SEC. 716. REPEAL OF PROVISIONS RELATING TO LAWFUL CONTRACT RATE. Section 5 of the Federal Home Loan Bank Act (12 U.S.C. 1425) is hereby repealed. SEC. 717. BANK STOCK AND OBLIGATIONS. Section 23 of the Federal Home Loan Bank Act (12 U.S.C. 1443) is amended to read as follows: “SEC. 23. FORMS OF BANK STOCK AND OBLIGATIONS. “Any stock, debentures, bonds, notes, or other obligations issued under the authority of this Act may be issued in uncertificated form, utilizing a book entry method, or in certificated form under such rules, regulations, or guidelines as the Board of Directors of the Federal Housing Finance Board may provide.”. SEC. 718. THRIFT ADVISORY COUNCIL. Section 8a of the Federal Home Loan Bank Act (12 U.S.C. 1428a) is hereby repealed. SEC. 719. EXAMINATION OF MEMBERS. Section 22 of the Federal Home Loan Bank Act (12 U.S.C. 1442) is amended to read as follows: “SEC 22. MEMBER FINANCIAL INFORMATION. “(a) In General.— In order to enable the Federal Home Loan Banks to carry out the provisions of this Act, the Secretary of the Treasury, the Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, the Chairperson of the Federal Deposit Insurance Corporation, the Chairperson of the National Credit Union Administration, and the Director of the Office of Thrift Supervision, upon request by any Federal Home Loan Bank— “(1) shall make available in confidence to any Federal Home Loan Bank, such reports, records, or other information as may be available, relating to the condition of any member of any Federal Home Loan Bank or any institution with respect to which any such Bank has had or contemplates having transactions under this Act; and “(2) may perform through their examiners or other employees or agents, for the confidential use of the Federal Home Loan Bank, examinations of institutions for which such agency is the appropriate Federal banking regulatory agency. Reports. In addition, the Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, the Chairperson of the National Credit Union Administration, and the Director of the Office of Thrift Supervision shall make available to the Board or any Federal Home Loan Bank the financial reports filed by members of any Bank to enable the Board or a Bank to compile and publish cost of funds indices or other financial or statistical reports. “(b) Consent by Members.— Every member of a Federal Home Loan Bank shall, as a condition precedent thereto, be deemed— “(1) to consent to such examinations as the Bank or the Board may require for the purposes of this Act; “(2) to agree that reports of examinations by local. State, or Federal agencies or institutions may be furnished by such authorities to the Bank or the Board upon request; and “(3) to agree to give the Bank or the Federal agency, upon request, such information as they may need to compile and publish cost of funds indices and to publish other reports or statistical summaries pertaining to the activities of Bank members.”. SEC. 720. LIQUIDITY. Section 5A of the Federal Home Loan Bank Act (12 U.S.C. 1425a) is hereby repealed. SEC. 721. AFFORDABLE HOUSING. Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as amended by section 710 and section 714 of this Act) is amended by adding at the end the following: “(i) Community Investment Program.— “(1) In general.— Each Bank shall establish a program to provide funding for members to undertake community-oriented mortgage lending. Each Bank shall designate a community investment officer to implement community lending and affordable housing advance programs of the Banks under this subsection and subsection (j) and provide technical assistance and outreach to promote such programs. Advances under this program shall be priced at the cost of consolidated Federal Home Loan Bank obligations of comparable maturities, taking into account reasonable administrative costs. “(2) Communityoriented mortgage lending.— For purposes of this subsection, the term ‘community-oriented mortgage lending’ means providing loans— “(A) to finance home purchases by families whose income does not exceed 115 percent of the median income for the area, “(B) to finance purchase or rehabilitation of housing for occupancy by families whose income does not exceed 115 percent of median income for the area, “(C) to finance commercial and economic development activities that benefit low- and moderate-income families or activities that are located in low- and moderate-income neighborhoods, and “(D) to finance projects that further a combination of the purposes described in subparagraphs (A) through (C). “(j) Affordable Housing Program.— “(1) In general.— Pursuant to regulations promulgated by the Board, each Bank shall establish an Affordable Housing Program to subsidize the interest rate on advances to members engaged in lending for long term, low- and moderate-income, owner-occupied and affordable rental housing at subsidized interest rates. “(2) Standards.— The Board’s regulations shall permit Bank members to use subsidized advances received from the Banks to— “(A) finance homeownership by families with incomes at or below 80 percent of the median income for the area; or “(B) finance the purchase, construction, or rehabilitation of rental housing, at least 20 percent of the units of which will be occupied by and affordable for very low-income households for the remaining useful life of such housing or the mortgage term. “(3) Priorities for making advances.— In using advances authorized under paragraph (1), each Bank member shall give prior it y to qualified projects such as the following: “(A) purchase of homes by families whose income is 80 percent or less of the median income for the area, “(B) purchase or rehabilitation of housing owned or held by the United States Government or any agency or instrumentality of the United States; and “(C) purchase or rehabilitation of housing sponsored by any nonprofit organization, any State or political subdivision of any State, any local housing authority or State housing finance agency. “(4) Report.— Each member receiving advances under this program shall report annually to the Bank making such advances concerning the member’s use of advances received under this program. “(5) Contribution to program.— Each Bank shall annually contribute the percentage of its annual net earnings prescribed in the following subparagraphs to support subsidized advances through the Affordable Housing Program: “(A) In 1990, 1991, 1992, and 1993, 5 percent of the preceding year’s net income, or such prorated sums as may e required to assure that the aggregate contribution of all the Banks shall not be less than $50,000,000 for each such year. “(B) In 1994, 6 percent of the preceding year’s net income, or such prorated sum as may be required to assure that the aggregate contribution of the Banks shall not be less than $75,000,000 for such year. “(C) In 1995, and subsequent years, 10 percent of the preceding year’s net income, or such prorated sums as may be required to assure that the aggregate contribution of the Banks shall not be less than $100,000,000 for each such year. “(6) Grounds for Suspending Contributions — “(A) In general.— If a Bank finds that the payments required under this paragraph are contributing to the financial instability of such Bank, it may apply to the Federal Housing Finance Board for a temporary suspension of such payments. “(B) Financial instability.— In determining the financial instability of a Bank, the Federal Housing Finance Board shall consider such factors as (i) whether the Bank’s earnings are severely depressed, (ii) whether there has been a substantial decline in membership capital, and (iii) whether there has been a substantial reduction in advances outstanding. “(C) Review.— The Board shall review the application and any supporting financial data and issue a written decision approving or disapproving such application. The Board’s decision shall be accompanied by specific findings and reasons for its action. “(D) Monitoring suspension.— If the Board grants a suspension, it shall specify the period of time such suspension shall remain in effect and shall continue to monitor the Bank’s financial condition during such suspension. “(E) Limitations on grounds for suspension.— The Board shall not suspend payments to the Affordable Housing Program if the Bank’s reduction in earnings is a result of (i) a change in the terms for advances to members which is not justified by market conditions, (ii) inordinate operating and administrative expenses, or (iii) mismanagement. “(F) The Federal Housing Finance Board shall notify the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate not less than 60 days before such suspension takes effect. Such suspension shall become effective unless a joint resolution is enacted disapproving such suspension. “(7) Failure to use amounts for affordable housing.— If any Bank fails to utilize or commit the full amount provided in this subsection in any year, 90 percent of the amount that has not been utilized or committed in that year shall be deposited by the Bank in an Affordable Housing Reserve Fund administered by the Board. The 10 percent of the unutilized and uncommitted amount retained by a Bank should be fully utilized or committed by that Bank during the following year and any remaining portion must be deposited in the Affordable Housing Reserve Fund. Under regulations established by the Board, funds from the Affordable Housing Reserve Fund may be made available to any Bank to meet additional affordable housing needs in such Bank’s district pursuant to this section. “(8) Net earnings.— The net earnings of any Federal Home Loan Bank shall be determined for purposes of this paragraph— “(A) after reduction for any payment required under section 21 or 21B of this Act; and “(B) before declaring any dividend under section 16. “(9) Regulations.— The Federal Housing Finance Board shall promulgate regulations to implement this subsection. Such regulations shall, at a minimum— “(A) specify activities eligible to receive subsidized advances from the Banks under this program; “(B) specify priorities for the use of such advances; “(C) ensure that advances made under this program will be used only to assist projects for which adequate Long-term monitoring is available to guarantee that affordability standards and other requirements of this subsection are satisfied; “(D) ensure that a preponderance of assistance provided under this subsection is ultimately received by low- and moderate-income households; “(E) ensure that subsidies provided by Banks to member institutions under this program are passed on to the ultimate borrower; “(F) establish uniform standards for subsidized advances under this program and subsidized lending by member institutions supported by such advances, including maximum subsidy and risk limitations for different categories of loans made under this subsection; and “(G) coordinate activities under this subsection with other Federal or federally-subsidized affordable housing activities to the maximum extent possible. “(10) Other programs.— No provision of this subsection or subsection (i) shall preclude any Bank from establishing additional community investment cash advance programs or contributing additional sums to the Affordable Housing Reserve Fund. “(11) Advisory council.— Each Bank shall appoint an Advisory Council of 7 to 15 persons drawn from community and nonprofit organizations actively involved in providing or promoting low- and moderate-income housing in its district. The Advisory Council shall meet with representatives of the board of directors of the Bank quarterly to advise the Bank on low- and moderate-income housing programs and needs in the district and on the utilization of the advances for these purposes. Each Advisory Council established under this paragraph shall submit to the Board at least annually its analysis of the low-income housing activity of the Bank by which it is appointed. “(12) Reports to congress.— “(A) The Board shall monitor and report annually to the Congress and the Advisory Council for each Bank the support of low-income housing and community development by the Banks and the utilization of advances for these purposes. “(B) The analyses submitted by the Advisory Councils to the Board under paragraph (11) shall be included as part of the report required by this paragraph. “(C) The Comptroller General of the United States shall audit and evaluate the Affordable Housing Program established by this subsection after such program has been operating for 2 years. The Comptroller General shall report to Congress on the conclusions of the audit and recommend improvements or modifications to the program. “(13) Definitions.— For purposes of this subsection— “(A) Low- or moderate-income household.— The term ‘low- or moderate-income household’ means any household which has an income of 80 percent or less of the area median. “(B) Very low-income household.— The term ‘very low-income household’ means any household that has an income of 50 percent or less of the area median. “(C) low- or moderate-income neighborhood.— The term ‘low- or moderate-income neighborhood’ means any neighborhood in which 51 percent or more of the households are low- or moderate-income households. “(D) Affordable for very-low income households.— For purposes of paragraph (2)(B) the term ‘affordable for very-low income households’ means that rents charged to tenants for unite made available for occupancy by low-income families shall not exceed 30 percent of the adjusted income of a family whose income equals 50 percent of the income for the area (as determined by the Secretary of Housing and Urban Development) with adjustment for family size.”. SEC. 722. TRANSFERRED EMPLOYEES OF FEDERAL HOME LOAN RANKS AND JOINT OFFICES. (a) In General.— Each employee of the Federal Home Loan Banks or joint offices of such Banks performing a function identified for transfer under section 403 of this Act, including employees who otherwise would be ineligible for employment by the United States because of their citizenship, shall be transferred for employment not later than 60 days after the date of the enactment of this Act. (b) Notice to Employees.— Transferring employees shall receive notice of their position assignments not later than 120 days after the effective date of their transfer. (c) Guaranteed Position.— Each transferred employee shall be guaranteed a position with the same status and tenure as that held by such employee on the day immediately preceding the transfer. Each such employee holding a permanent position shall not be involuntarily separated for one year after the date of transfer, except for cause. (d) Pay and Benefits.— Each employee transferred under this section shall be entitled to receive, during the one-year period immediately following the transfer, pay and benefits comparable to those received by such employee immediately preceding the transfer. Where necessary or appropriate to further the safety and soundness of the thrift industry, the employing agency may continue the pre-transfer compensation of any transferring employee for up to 2 years beyond the expiration of the period provided for under the preceding sentence. Such pay and benefits shall be subject to the comparability provisions of this Act. Any transferred employee who suffers a reduction of pay or benefits as a result of such comparability provisions shall be compensated for such reduction during the 1 year period following the transfer by assessments from the Federal Home Loan Bank or joint office of such Banks, from which the employee transferred. In any event, this subsection shall only apply to a transferred employee while such employee remains with the agency to which the employee is transferred. (e) Health Insurance.— If the health insurance program of a transferred employee is not continued by the agency to which the employee is transferred, such employee may elect to participate in the agency’s health insurance program notwithstanding health conditions preexisting at the time of election or enrollment into an alternate health insurance program of the agency to which he or she is transferred and without regard to any other regularly scheduled open season. Such election shall be made within 30 days of the transfer. (f) Equitable Treatment.— The Director of the Office of Thrift Supervision or the Chairperson of the Federal Housing Finance Board shall take such action as is necessary on a case-by-case basis so that employees transferring under this section receive equitable treatment regarding credit for prior service with a Federal entity or instrumentality, or with a Federal Home Loan Bank or joint office of such Banks, with respect to the transferring employees’ retirement accounts and the transferring employees’ accrued leave or vacation time, in recognition of the transferring employees’ supervisory service. (g) Special Rule for Certain Annuitants.— An individual who was a reemployed annuitant on July 26, 1989, and who is transferred under this section, shall not be subject to the deduction from pay required by section 8344 or 8468 of title 5, United States Code, during the 1-year period beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. SEC. 723. TRANSITIONAL PROVISIONS. (a) Federal Home Loan Banks’ Share of Administrative Expenses.— The Federal Home Loan Banks shall pay to the Director of the Office of Thrift Supervision the amount obtained by multiplying the administrative expenses of the Office of Thrift Supervision incurred in connection with functions of the Banks that are trans-ferred to the Office (less any fees or assessments collected by the Office) by a fraction— (1) the numerator of which is the amount of such expenses of the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation paid by the Banks during the 1-year period ending on the date of enactment of this Act; and (2) the denominator of which is the total expenses of such Board and Corporation during such period. No payment under this subsection is required after December 31, 1989. (b) Compensation of Supervisory and Examinations Employees.— The Federal Home Loan Banks shall continue to pay the compensation of employees of the Federal Home Loan Banks or the joint offices of such banks who, on the day before the date of the enactment of this Act, are performing supervisory and examination functions until such supervisory and examination functions are transferred under this Act. Thereafter, the obligation of the Federal Home Loan Banks hereunder to pay such applicable compensation shall continue until the later of— (1) the date which is 120 days after the date of transfer of such supervisory and examination functions to the Office of Thrift Supervision, or (2) March 31, 1990. Payment of such compensation by the Federal Home Loan Banks shall be in lieu of, and not in addition to, the payment of compensation by the Office of Thrift Supervision. (c) Facilities and Support Services.— Until December 31, 1990, the Federal Home Loan Banks, as necessary, shall (with respect to supervisory and examination functions performed by employees transferred from the Federal Home Loan Banks or joint offices of such Banks to the Office of Thrift Supervision), provide the Office of Thrift Supervision facilities and support services comparable to those presently provided for the employees of the Federal Home Loan Banks or joint offices of such Banks performing such supervisory and examination functions, including office space, furniture and equipment, computer, personnel, and other support services. With respect to supervisory and examination functions presently performed by employees of individual Federal Home Loan Banks, each such Bank will only be required to provide such facilities and support services to the extent that the functions continue to be performed in that Bank’s offices. (d) Principal Supervisory Agent.— Beginning on the date of enactment of this Act until the Director of the Office of Thrift Supervision shall otherwise provide, the Principal Supervisory Agent for each Federal Home Loan Bank district shall be the senior supervisory official (other than the President of the Federal Home Loan Bank) employed by the Federal Home Loan Bank in such district on the day before the date of the enactment of this Act, and such employees performing supervisory and examination functions shall continue to be responsible for the supervision and examination of savings associations within such district. SEC. 724. FEDERAL HOME LOAN BANK RESERVES. (a) In General.— Section 16(a) of the Federal Home Loan Bank Act (12 U.S.C. 1436(a)) is amended— (1) by striking the first three sentences and inserting in lieu thereof: “Each Federal Home Loan Bank may carry to a reserve account from time-to-time such portion of its net earnings as may be determined by its board of directors.”; and (2) by striking the fifth sentence and inserting the following: “No dividends shall be paid except out of net earnings remaining after reductions for all reserves, chargeoffs, purchases of capital certificates of the Financing Corporation, and payments relating to the Funding Corporation required under this Act have been provided for, other than chargeoffs or expenses incurred by a Bank in connection with the purchase of capital stock of the Financing Corporation under section 21 or payments relating to the Funding Corporation Principal Fund under section 21B(e), and then only with the approval of the Federal Housing Finance Board. Beginning on January 1, 1992, Effective date. the preceding sentence shall be applied by substituting ‘previously retained earnings or current net earnings’ for ‘net earnings’.”. (b) Effective Date.— The amendment made by subsection (a)(1) 12 USC 1436 note. shall take effect on January 1, 1992. SEC. 725. SPECIAL ACCOUNT. At the time of dissolution of the Federal Home Loan Bank Board, all such moneys and funds as shall remain in the special deposit account of the Federal Home Loan Bank Board, or other such accounts, shall become the property of the Federal Housing Finance Board. Subtitle B— Federal Home Loan Mortgage Corporation SEC. 731. FEDERAL HOME LOAN MORTGAGE CORPORATION. (a) Statement of Purpose.— (1) In general.— Section 301 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 note) is amended— (A) by inserting “(a)” after the section designation; and (B) by adding at the end the following new subsection: “(b) It is the purpose of the Federal Home Loan Mortgage Corporation— “(1) to provide stability in the secondary market for home mortgages; “(2) to respond appropriately to the private capital market; and “(3) to provide ongoing assistance to the secondary market for home mortgages (including mortgages securing housing for low- and moderate-income families involving a reasonable economic return to the Corporation) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for home mortgage financing.”. (2) Conforming amendment.— The section heading for section 301 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 note) is amended to read as follows: (b) Board of Directors.— (1) New board.— Section 303(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(a)) is amended to read as follows: “(a) (1) There is hereby created the Federal Home Loan Mortgage Corporation, which shall be a body corporate under the direction of a Board of Directors. Within the limitations of law and regulation, the Board of Directors shall determine the general policies that District of Columbia. govern the operations of the Corporation, The principal office of the Corporation shall be in the District of Columbia or at any other place determined by the Corporation. “(2) (A) The Board of Directors of the Corporation shall consist of 18 persons, 5 of whom shall be appointed annually by the President of the United States and the remainder of whom shall be elected annually by the voting common stockholders. The Board of Directors shall at all times have as members appointed by the President of the United States at least 1 person from the homebuilding industry, at least 1 person from the mortgage lending industry, and at least 1 person from the real estate industry. “(B) Each member of the Board of Directors shall be such or elected for a term ending on the date of the next annual meeting of the voting common stockholders. “(C) Any appointive seat on the Board of Directors that becomes vacant shall be filled by appointment by the President of the United States, but only for the unexpired portion of the term. Any elective seat on the Board of Directors that becomes vacant after the annual election of the directors shall be filled by the Board of Directors, but only for the unexpired portion of the term. “(D) Any member of the Board of Directors who is a full-time officer or employee of the Federal Government shall not, as such member, receive compensation for services as such a member.”. (2) Transitional provisions.— (A) Interim board.— (i) Establishment.— There shall be an interim Board of Directors of the Federal Home Loan Mortgage Corporation, which shall serve from the date of the enactment of this Act until the date of the 1st meeting of the voting common shareholders of the Corporation at which the first election of the directors elected by the shareholders occurs. (ii) Members.— The interim Board of Directors of the Federal Home Loan Mortgage Corporation shall consist of— (I) the President of the Corporation; and (II) the persons who were (on the day before the date of the enactment of this Act) the Chairman of the Federal Home Loan Bank Board and the Secretary of Housing and Urban Development (or their designees). (iii) Quorum.— A quorum of the interim Board of Directors of the Federal Home Loan Mortgage Corporation shall consist of a majority of the directors duly serving from time to time. (B) Election of permanent directors.— The first meeting of the voting common shareholders of the Federal Home Loan Mortgage Corporation for election of directors shall occur, under procedures established by the Corporation, within 6 months after the date of the enactment of this Act. (c) Regulatory Power.— Section 303 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452) is amended— (1) by redesignating subsections (b) through (D as subsections (c) through (g), respectively; and (2) by inserting after subsection (a) the following new subsection: “(b) (1) The Secretary of Housing and Urban Development shall have general regulatory power over the Corporation and shall make such rules and regulations as shall be necessary and proper to ensure that the purposes of this title are accomplished. “(2) The Secretary of Housing and Urban Development may require Disadvantaged persons. that a reasonable portion of the mortgage purchases of the Corporation be related to the national goal of providing adequate housing for low- and moderate-income families, but with reasonable economic return to the Corporation. “(3) The aggregate amount of cash dividends paid by the Corporation in any fiscal year on account of any share of its common stock shall not exceed any rate that may be determined from time to time by the Secretary of Housing and Urban Development to be a fair rate of return after consideration of the current earnings and capital condition of the Corporation. “(4) The Secretary of Housing and Urban Development may examine and audit the books and financial transactions of the Corporation and may require the Corporation to issue any reports on its activities that the Secretary determines to be advisable. The Secretary Reports. shall, not later than June 30 of each year, submit to the Congress a report describing the activities of the Corporation under this Act. “(5) The aggregate amount of notes, debentures, or substantially identical types of unsecured obligations outstanding at any time shall not exceed the amount which is 15 times the sum of the Corporation’s capital, capital surplus, general surplus, reserves, and undistributed earnings unless a greater ratio shall be fixed at any time or from time to time by the Secretary of Housing and Urban Development. The outstanding total principal amount of any obligations of the Corporation which are entirely subordinated to the general debt obligations of the Corporation shall be deemed to be capital of the Corporation for the purpose of determining the aggregate amount of notes, debentures, or substantially identical types of unsecured obligations outstanding at any time. “(6) All issuances of stock, and debt obligations convertible into stock, by the Corporation shall be made only with the approval of the Secretary of Housing and Urban Development. “(7) (A) The exercise of the authority of the Corporation pursuant to commitments or otherwise to purchase, service, sell, lend on the security of, or otherwise deal in conventional residential mortgages under section 305(a) shall be subject to the approval of the Secretary of Housing and Urban Development. “(B) Any conventional mortgage programs or activities with respect to purchasing, servicing, selling, lending on the security of, or otherwise dealing in mortgages in which the Corporation has engaged or is engaging as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of Housing and Urban Development as required by this paragraph. “(8) If the Corporation submits to the Secretary of Housing and Reports. Urban Development a request for approval or other action under this title, the Secretary shall, not later than the expiration of the 45-day period following the submission of the request, approve the request or transmit to the Congress a report explaining why the request has not been approved. The period may be extended for an additional 15-day period if the Secretary requests additional information from the Corporation, but the 45-day period may not be extended for any other reason or for any period in addition to or other than the 15-day period. If the Secretary fails to transmit the report to the Congress within the 45-day period or 60-day period, as the case may be, the Corporation may proceed as if the request had been approved.”. (d) Common Stock.— (1) In general.— Section 304(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(a)) is amended to read as follows: “(a) (1) The common stock of the Corporation shall consist of— “(A) non voting common stock, which shall be issued only to Federal home loan banks; and “(B) voting common stock, which shall be issued to such holders in the manner and amount, and subject to any limitations on concentration of ownership, as may be established by the Corporation. “(2) The nonvoting common stock and the voting common stock shall have such par value and other characteristics as the Corporation provides. The voting common stock shall be vested with all voting rights, each share Being entitled to 1 vote. The free transfer-ability of the voting common stock at all times to any person, firm, corporation or other entity shall not be restricted except that, as to the Corporation, it shall be transferable only on the books of the Corporation. Nonvoting common stock of the Corporation shall be evidenced in the manner and shall be transferable only to the extent, to the transferees, and in the manner, provided by the Corporation.”. (2) Conversion of stock.— On the date of the enactment of this Act, each share of outstanding senior participating preferred stock of the Federal Home Loan Mortgage Corporation, with a par value of $2.50 per share, shall be changed into and shall become 1 share of voting common stock of the Corporation. Such voting common stock shall, with respect to the nonvoting common stock of the Corporation, retain all of the rights, priorities and privileges of the senior participating preferred stock. The transformation of the senior participating preferred stock into voting common stock under this paragraph shall be deemed to satisfy the obligation of the Corporation to redeem senior participating preferred stock for non-callable common stock. (3) Conforming amendments.— (A) Subscriptions of federal home loan banks.— Section 304(b) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(b)) is amended by inserting “nonvoting” before “common”. (B) Allocation of subscriptions.— Section 304(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(c)) is amended by striking “such” and by inserting “nonvoting common” before “stock”. (C) Retirement of stock.— Section 304(d) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(d)) is amended by inserting “nonvoting common” before “stock” each place it appears. (e) Mortgage Operations.— (1) Prohibition on fees.— Section 305(a)(1) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(1) is amended by adding at the end the following: “Nothing in this section authorizes the Corporation to impose any charge or fee upon any mortgagee approved by the Secretary of Housing and Urban Development for participation in any mortgage insurance program under the National Housing Act solely because of such status.”. (2) Lending activities.— Section 305(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)) is amended by adding at the end the following new paragraph: “(5) The Corporation is authorized to lend on the security of, and to make commitments to lend on the security of, any mortgage that the Corporation is authorized to purchase under this section. The volume of the Coiporation’s lending activities and the establishment of its loan ratios, interest rates, maturities, and charges or fees in its secondary market operations under this paragraph, shall be determined by the Corporation from time to time; and such determinations shall be consistent with the objectives that the lending activities shall be conducted on such terms as will reasonably prevent excessive use of the Corporation’s facilities, and that the operations of the Corporation under this paragraph shall be within its income derived from such operations and that such operations shall be fully self-supporting. The Corporation shall not be permitted to use its lending authority under this paragraph (A) to advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans. Notwithstanding any Federal, State, or other law to the contrary, the Corporation is hereby empowered, in connection with any loan under this paragraph, whether before or after any default, to provide by contract with the borrower for the settlement or extinguishment, upon default, of any redemption, equitable, legal, or other right, title, or interest of the borrower in any mortgage or mortgages that constitute the security for the loan; and with respect to any such loan, in the event of default and pursuant otherwise to the terms of the contract, the mortgages that constitute such security shall become the absolute property of the Corporation.”. (f) References to FSLIC and FHLBB.— (1) Section 302.— Section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) is amended— (A) in the 4th sentence, by striking out “Federal Savings and Loan Insurance Corporation” and inserting in lieu thereof “Resolution Trust Corporation”; and (B) in the 8th sentence, by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Federal Housing Finance Board”. (2) Section 305.— Section 305 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454) is amended— (A) by striking out “Federal Savings and Loan Insurance Corporation” each place it appears and inserting in lieu thereof “Resolution Trust Corporation”; and (B) in subsection (a)(2), by striking out “Federal Home Loan Bank Board“ and inserting in lieu thereof “Federal Housing Finance Board”. (g) Standby Crédit.— Section 306(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(c)) is amended to read as follows: “(c) (1) The Secretary of the Treasury may purchase any obligations issued under subsection (a). For such purpose, the Secretary may use as a public debt transaction the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under such chapter are extended to include such purpose. “(2) The Secretary of Treasury shall not at any time purchase any obligations under this subsection if the purchase would increase the aggregate principal amount of the outstanding holdings of obligations under this subsection by the Secretary to an amount greater than $2,250,000,000. “(3) Each purchase of obligations by the Secretary of the Treasury under this subsection shall be upon terms and conditions established to yield a rate of return determined by the Secretary to be appropriate, taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the making of the purchase. “(4) The Secretary of the Treasury may at any time sell, upon terms and conditions and at prices determined by the Secretary, any of the obligations acquired by the Secretary under this subsection. “(5) All redemptions, purchases and sales by the Secretary of the Treasury of obligations under this subsection shall be treated as public debt transactions of the United States.”. (h) Preferred Stock.— Section 306(f) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(f)) is amended to read as follows: “(f) The Corporation may have preferred stock on such terms and conditions as the Board of Directors shall prescribe. Any preferred stock shall not be entitled to vote with respect to the election of any member of the Board of Directors.”. (i) Terms of Obligations.— Section 306 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455) is amended by adding at the end the following new subsections: “(j) (1) Any notes, debentures, or substantially identical types of unsecured obligations of the Corporation evidencing money borrowed, whether general or subordinated, shall be issued upon the approval of the Secretary of the Treasury and shall have such maturities and bear such rate or rates of interest as may be determined by the Corporation with the approval of the Secretary of the Treasury. “(2) Any notes, debentures, of substantially identical types of unsecured obligations of the Corporation having maturities of 1 year or less that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 365 days after such date of enactment. “(3) Any notes, debentures, or substantially identical types of unsecured obligations of the Corporation having maturities of more than 1 year that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recov-ery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 60 days after such date of enactment. “(k) (1) Any securities in the form of debt obligations or trust certificates of beneficial interest, or both, and based upon mortgages held and set aside by the Corporation, shall be issued upon the approval of the Secretary of the Treasury and shall have such maturities and shall bear such rate or rates of interest as may be determined by the Corporation with the approval of the Secretary of the Treasury. “(2) Any securities in the form of debt obligations or trust certificates of beneficial interest, or both, and based upon mortgages held and set aside by the Corporation, that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection.”. (j) State Limitations.— (1) The second sentence of section 307(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(a)) is amended to read as follows; “The Corporation is authorized to conduct its business without regard to any qualification or similar statute in any State.”. (2) The amendment made by this subsection shall not apply to 12 USC 1456 note. any assertion of priority by the Federal Home Loan Mortgage Corporation with respect to any cause of action or claim filed before the date of the enactment of this Act. (k) Penal Provisions.— Section 308 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1457) is amended— (1) in subsection (a), by striking the subsection designation; and (2) by striking subsections (b), (c), (d), (e), and (f). (l) Construction.— Section 310 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1459) is amended— (1) in the section heading, by striking “construction and”; and (2) by striking the first sentence. (m) Conforming Amendments to Federal National Mortgage Association Charter Act.— (1) Statement of purpose.— Section 301 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1716) is amended— (A) by striking paragraphs (a) and (b) and inserting the following new paragraphs; “(1) provide stability in the secondary market for home mortgages; “(2) respond appropriately to the private capital market; “(3) provide ongoing assistance to the secondary market for home mortgages (including mortgages securing housing for low- and moderate-income families involving a reasonable economic return) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for home mortgage financing; and”; and (B) by redesignating paragraph (c) as paragraph (4). (2) Lending activities.— Section 304(a)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719(a)(2)) is amended— (A) by inserting after the 3rd sentence the following new sentence: “The corporation shall not be permitted to use its lending authority (A) to advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans.”; and (B) by striking the 1st and 2d sentences. (3) Audits by gao.— Section 309 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a) is amended by adding at the end the following new subsection: “(j) The mortgage transactions of the corporation may be subject to audit by the Comptroller General of the United States in accordance with the principles and procedures applicable to commercial corporation transactions under such rules and regulations as may be prescribed by the Comptroller General. The representatives of the General Accounting Office shall have access to such books, accounts, financial records, reports, files, and such other papers, things, or property belonging to or in use by the corporation and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by Reports. depositories, fiscal agents, and custodians. A report on each such audit shall be made by the Comptroller General to the Congress. The corporation shall reimburse the General Accounting Office for the full cost of any such audit as billed therefor by the Comptroller General.”. Subtitle C— Technical and Conforming Amendments SEC. 741. REPEAL OF LIMITATION OF OBLIGATION FOR ADMINISTRATIVE EXPENSES. Section 7(b) of the First Deficiency Appropriation Act of 1936 (15 U.S.C. 712a(b)) is amended by striking the following: “(1) Federal Home Loan Bank Board;”; “(2) Home Owners’ Loan Corporation;”; and “(11) Federal Savings and Loan Insurance Corporation;”. SEC. 742. AMENDMENT OF TITLE 5, UNITED STATES CODE. (a) Executive Schedule.— (1) Section 5314 of title 5, United States Code (5 U.S.C. 5315) is amended— (A) by striking “Chairman of the Federal Home Loan Bank Board.”; and (B) by adding at the end thereof the following: “Director of the Office of Thrift Supervision. “Chairperson of the Federal Housing Finance Board.”. (2) Section 5315 of title 5, United States Code (5 U.S.C. 5315) is amended— (A) by striking out “Members, Federal Home Loan Bank Board.”, and (B) by inserting “Directors, Federal Housing Finance Board ”. (b) Limitation on Pay Fixed by Administrative Action.— Section 5373(2) of title 5, United States Code, is amended by inserting after “481,” the following: “1437, 1439,”. (c) Definition of Agency.— Section 3132(a)(1) of title 5, United States Code (5 U.S.C. 3132(a)(1), is amended— (1) in subparagraph (B), by striking “or” after the semicolon; (2) in subparagraph (C), by inserting “or” after the semicolon; and (3) by adding at the end the following: “(D) the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Housing Finance Board, the Resolution Trust Corporation, and the National Credit Union Administration;”. SEC. 743. AMENDMENT OF BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT PROVISIONS. (a) Section 255(g)(1)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended— (1) by inserting after the item relating to the Comptroller of the Currency the following new item: “Director of the Office of Thrift Supervision;”; (2) by striking out “Federal Home Loan Bank Board;” and inserting in lieu thereof the following new items: “Federal Deposit Insurance Corporation, Bank Insurance Fund; “Federal Deposit Insurance Corporation, FSLIC Resolution Fund; “Federal Deposit Insurance Corporation, Savings Association Insurance Fund;”; (3) by striking out “Federal Home Loan Bank Board, Federal Savings and Loan Insurance Corporation” and inserting in lieu thereof “Federal Housing Finance Board”; and (4) by inserting after the item relating to the Postal service fund the following new items: “Resolution Funding Corporation; “Resolution Trust Corporation;”. (b) Section 256(b)(4) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 256(b)(4)) is amended— 2 USC 906. (1) by striking out subparagraph (C) and inserting in lieu thereof the following new subparagraph “(C) Office of Thrift Supervision.”; (2) by striking subparagraph (D) and inserting in lieu thereof the following new subparagraph: “(D) Office of Thrift Supervision.”; and (3) by adding at the end thereof the following new subparagraphs: “(H) Resolution Funding Corporation. “(I) Resolution Trust Corporation.”. (c) Section 255(g)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985 is amended by striking “Federal Savings and Loan Insurance Corporation fund (82–4037–0–3–371);”. SEC. 744. CONFORMING AMENDMENTS TO FINANCIAL INSTITUTION RELATED ACTS. (a) Federal Financial Institutions Examination Council Act.— (1) Section 1003.— Section 1003 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3302) is amended— (A) in paragraph (1), by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Office of Thrift Supervision”; and (B) in paragraph (3), by striking out “savings and loan association” and inserting in lieu thereof “savings association”. (2) Section 1004.— Section 1004(a)(4) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3303(a)(4)) is amended by striking out “Chairman of the Federal Home Loan Bank Board, and” and inserting in lieu thereof “Director, Office of Thrift Supervision”. (3) Section 1006.— Section 1006(d) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3305(d)) is amended in the 2d sentence by inserting “and employees of the Federal Housing Finance Board” after “supervisoiy agencies”. (b) Right to Financial Privacy Act.— Section 1101 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401) is amended— (1) in paragraph (1), by striking out “savings and loan” and inserting in lieu thereof “savings association”; (2) in paragraph (6), by striking out subparagraph (B) and redesignating the remaining subparagraphs as subparagraphs (B) through (H), respectively; and (3) in paragraph (6)(B) (as so redesignated), by striking out “the Federal Home Loan Bank Board” and inserting in lieu thereof “Director, Office of Thrift Supervision”. (c) Alternative Mortgage Transactions Parity Act.— The Alternative Mortgage Transactions Parity Act of 1982 (12 U.S.C. 3801–06) is amended by striking out “Federal Home Loan Bank Board” each place such term appears and inserting in lieu thereof “Director of the Office of Thrift Supervision”. (d) Expedited Funds Availability Act.— Section 610(a)(2) of the Expedited Funds Availability Act (12 U.S.C. 4009(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision in the case of savings associations the deposits of which are insured by the Federal Deposit Insurance Corporation; and”. (e) Paperwork Reduction Act.— Section 2(a)(10) of the Paperwork Reduction Act of 1980 (44 U.S.C. 3502(a)(10)) is amended by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “the Federal Housing Finance Board”. (f) Federal Property and Administrative Services Act.— Section 602(11) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 474(11)) is amended— (1) by inserting “or the Resolution Trust Corporation” after “Department of Housing and Urban Development”; (2) by striking out “savings and loan accounts” and inserting in lieu thereof “savings association accounts”; and (3) by inserting “under the Federal Deposit Insurance Act or any other law.” after “National Housing Act”. (g) Public Buildings Act.— Section 13(4) of the Public Buildings Act of 1959 (40 U.S.C. 612(d)) is amended by striking out subparagraph (D). (h) Bank Protection Act.— Section 2 of the Bank Protection Act of 1968 (12 U.S.C. 1881) is amended— (1) in paragraph (4), by— (A) striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Director of the Office of Thrift Supervision”; (B) striking out “and loan”; and (C) striking “associations” and all that follows through “Corporation”; and (2) in paragraph (3), by inserting “and State savings associations” before “, and”. (i) The Federal Reserve Act.— (1) Section 11.— Section 11(a)(2) of the Federal Reserve Act (12 U.S.C. 248(a)(2)) is amended by striking “(iii) Federal Home Loan Bank Board in the case of any institution insured by the Federal Savings and Loan Insurance Corporation” and inserting “(iii) the Director of the Office of Thrift Supervision in the case of any savings association which is an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act)”. (2) Section 19(b).— Section 19(b)(1)(A)(vi) of the Federal Reserve Act (12 U.S.C. 461(b)(1)(A)(vi)) is amended to read as follows: “(vi) any savings association (as defined in section 3 of the Federal Deposit Insurance Act) which is an insured depository institution (as defined in such Act) or is eligible to apply to become an insured depository institution under the Federal Deposit Insurance Act; and”. (3) Section 19.— Section 19 of the Federal Reserve Act (12 U.S.C. 461) is amended by striking out “the Federal Home Loan Bank Board,” and inserting in lieu thereof “the Director of the Office of Thrift Supervision,” each place it appears. (j) Public Law 93–495.— Section 3 of title I of Public Law 93–495 (12 U.S.C. 250) is amended by striking “Federal Home Loan Bank Board” and inserting “Director of the Office of Thrift Supervision”. (k) Truth in Lending Act.— Section 108(a)(2) of the Truth in Lending Act (15 U.S.C. 1607(a)(2)) is amended to read as follows: (2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (l) Fair Credit Reporting Act.— Section 621(b)(2) of the Fair Credit Reporting Act (15 U.S.C. 1681s(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (m) Equal Credit Opportunity Act.— Section 704(a)(2) of the Equal Credit Opportunity Act (15 U.S.C. 1691c(a)(2)) is amended to read as follows: “(2) Section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (n) Fair Debt Collection Practices Act.— Section 814(b)(2) of the Fair Debt Collection Practices Act (15 U.S.C. 1692/(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (o) Electronic Fund Transfer Act.— Section 917(a)(2) of the Electronic Fund Transfer Act (15 U.S.C. 1693o(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (p) Home Mortgage Disclosure Act of 1975.— (1) Section 305.— Section 305(b)(2) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2804(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation; and”. (2) Section 306.— Section 306(b)(2) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2805(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (3) Section 307.— Section 307 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2806) is amended by striking “Federal Home Loan Bank Board” each place it appears and inserting “Director of the Office of Thrift Supervision”. (q) Community Reinvestment Act of 1977.— Section 803(1)(D) of the Community Reinvestment Act of 1977 (12 U.S.C. 2902(1)(D)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and a savings and loan holding company;”. (r) Depository Institutions Management Interlocks Act.— (1) Section 207(4) of the Depository Institutions Management Interlocks Act (12 U.S.C. 3206(4)) is amended to read as follows: “(4) the Director of the Office of Thrift Supervision with respect to a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and savings and loan holding companies,”. (s) Depository Institutions Deregulation Act of 1980.— Section 208(a)(2) of the Depository Institutions Deregulation Act of 1980 (12 U.S.C. 3507(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (t) Federal Trade Commission Act.— Section 18(f)(3) of the Federal Trade Commission Act (Ifî U.S.C. 57a(f)(3)) is amended to read as follows: “(3) Compliance with regulations prescribed under this subsection shall be enforced under section 8 of the Federal Deposit Insurance Act with respect to savings associations as defined in section 3 of the Federal Deposit Insurance Act.”, (u) Securities Exchange Act of 1934.— (1) Section 3.— Section 3(a)(34) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(34)) is amended— (A) in subparagraph (G)— (i) by striking clauses (iv) and (v) and inserting the following: “(iv) the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”; and (ii) by redesignating clause (vi) as clause (v); and (B) in the second sentence, by striking “the Federal Home Loan Bank Board” and inserting “the Office of Thrift Supervision”. (2) Section 12.— Section 12(i) of the Securities Exchange Act of 1934 (15 U.S.C. 78/(i)) is amended— (A) in the first sentence— (i) by inserting “and savings associations” after “banks” the first place it appears; (ii) by striking “or institutions the accounts of which are insured by the Federal Savings and Loan Insurance Corporation”; and (iii) by striking paragraph (4) and inserting “(4) with respect to savings associations the accounts of which are insured by the Federal Deposit Insurance Corporation are vested tn the Office of Thrift Supervision”; and (B) in the second sentence, by striking “the Federal Home Loan Bank Board” and inserting “the Office of Thrift Supervision”. (5) Section 15.— Section 15C(f)(1) (15 U.S.C. 78o-5(f)(1)) of such Act is amended by striking “Federal Home Loan Bank Board” and inserting “Director of the Office of Thrift Supervision”.

20. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 title VII · 103 Stat. 183

    1. Redesignated · 12 U.S.C. § 1426(f)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), redesignated subsec. (j) as (f)

    2. Substituted · 12 U.S.C. § 1426(f)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), substituted “Board” for “board”

    3. Struck · 12 U.S.C. § 1426(f)

       Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), struck out former subsec. (f) which related to subscription by United States, maximum amounts, and payments

    Source evidence

    Code amendment note
    Subsec. (f). Pub. L. 101–73, §§ 701(b)(1), (3)(A), 706(1), redesignated subsec. (j) as (f), substituted “Board” for “board”, and struck out former subsec. (f) which related to subscription by United States, maximum amounts, and payments.

    Enacted provision · exact public law
    TITLE VII— FEDERAL HOME LOAN BANK SYSTEM REFORMS Subtitle A— Federal Home Loan Bank Act Amendments SEC. 701. DEFINITIONS. (a) In General.— Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is amended— (1) by striking paragraphs (1) and (2) and inserting the following: “(1) Board.— The term ‘Board’ means the Federal Housing Finance Board established under section 2A. “(2) (A) Bank.— The term ‘Federal Home Loan Bank’ or ‘Bank’ means a bank established under the authority of the Federal Home Loan Bank Act. “(B) Bank system.— The term ‘Federal Home Loan Bank System’ means the Federal Home Loan Banks under the supervision of the Board.”; (2) in paragraph (4) by striking “(except when used in reference to the member of the Board)”; and (3) by striking paragraph (9) and adding at the end the following: “(9) Savings association.— The term ‘savings association’ has the meaning given to such term in section 3 of the Federal Deposit Insurance Act. “(10) Chairperson.— The term ‘Chairperson’ means the Chairperson of the Board. “(11) Secretary.— The term ‘Secretary’ means the Secretary of Housing and Urban Development. “(12) Insured depository institution.— The term ‘insured depository institution’ means— “(A) an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act), and “(B) except as used in sections 21A and 21B, an insured credit union (as defined in section 101 of the Federal Credit Union Act).”. (b) Change in Terms.— (1) In general— Except as otherwise specifically provided in 12 USC 1421 et seq. this title, the Federal Home Loan Bank Act is amended by striking “board” (other than in section 7) and “Federal Home Loan Bank Board” each place such terms appear and inserting “Board”. (2) Chairperson.— The Federal Home Loan Bank Act is amended by striking “Chairman” and “chairman” each place such terms appear and inserting “Chairperson” and “chairperson”. (3) Exceptions.— (A) General rule.— The amendments made by paragraph (1) shall not apply to sections 18(c), 21A, and 21B of the Federal Home Loan Bank Act. (B) Conforming amendment.— Section 18(c) of the Federal Home Loan Bank Act (12 U.S.C. 1438(c)) is amended by striking “Federal Home Loan Bank Board” and “board” each place such terms appear and inserting “Director of the Office of Thrift Supervision”. (c) Technical Amendments — Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended— (1) in subsection (e)(2)(C), by inserting “Federal Home Loan” before “Banks,”; and (2) in the first sentence of the third paragraph of subsection (i) by inserting “Federal” before “Home Loan Bank System”. SEC. 702. FEDERAL HOUSING FINANCE BOARD ESTABLISHED. (a) In General.— The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended by inserting after section 2 the following new sections: “SEC. 2A. FEDERAL HOUSING FINANCE BOARD. “(a) Establishment.— “(1) In general.— There is established the Federal Housing Finance Board, which shall succeed to the authority of the Federal Home Loan Bank Board with respect to the Federal Home Loan Banks. “(2) Status.— The Board shall be an independent agency in the executive branch of the Government. “(3) Duties.— The duties of the Board shall be— “(A) to supervise the Federal Home Loan Banks, “(B) to ensure that the Federal Home Loan Banks carry out their housing finance mission, “(C) to ensure the Federal Home Loan Banks remain adequately capitalized and able to raise funds in the capital markets, and “(D) to ensure the Federal Home Loan Banks operate in a safe and sound manner. “(b) Management.— “(1) In general.— The management of the Board shall be vested in a Board of Directors consisting of 5 directors as follows: “(A) The Secretary who shall serve without additional compensation. “(B) Four citizens of the United States, appointed by the President, by and with the advice and consent of the Senate, each of whom shall hold office for a term of 7 years. “(2) Provisions relating to appointed directors.— “(A) In general.— The directors appointed pursuant to paragraph (1)(B) shall be from among persons with extensive experience or training in housing finance or with a commitment to providing specialized housing credit. An appointed director shall not hold any other appointed office during his or her term as director. Not more than 3 directors shall be members of the same political party. Not more than 1 appointed director shall be from any single district of the Federal Home Loan Bank System. Nominations pursuant to this subparagraph shall be referred in the Senate to the Committee on Banking, Housing, and Urban Affairs. “(B) Consumer representative.— At least 1 director shall be chosen from an organization with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections. “(C) Limitations on conflicts of interest.— No director may— “(i) serve as a director or officer of any Federal Home Loan Bank or any member of any Bank; or “(ii) hold shares of, or any other financial interest in, any member of any such Bank. “(3) Initial terms.— Notwithstanding paragraph (2), of the directors first appointed— “(A) one shall be appointed for a term of 1 year; “(B) one shall be appointed for a term of 3 years; and “(C) one shall be appointed for a term of 5 years. “(c) Chairperson; Transitional Provisions.— “(1) In general.— The President shall designate 1 of the appointed directors to be the Chairperson of the Board. The Chairperson shall designate another director to serve as Acting Chairperson during the absence or disability of the Chairperson. “(2) Transitional provision.— Beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, until such time that at least 2 directors are appointed and confirmed pursuant to subsection (b), the Secretary shall act for all purposes and with the full powers of the Board of Directors. The Secretary may utilize the services of employees from the Department of Housing and Urban Development to perform services for the Board of Directors during such transition period. “(d) Vacancies.— “(1) In general.— Any vacancy on the Board of Directors shall be filled in the manner in which the original appointment was made. Any director appointed to fill a vacancy occurring before the expiration of the term for which such director’s predecessor was appointed shall be appointed only for the remainder of such term. Each director may continue to serve until a successor has been appointed and qualified. “(2) The secretary.— In the event of a vacancy in the office of Secretary or during the absence or disability of the Secretary, the Acting Secretary shall act as a director in place of the Secretary. “SEC. 2B. POWERS AND DUTIES. “(a) General Powers.— -The Board shall have the following powers: “(1) To supervise the Federal Home Loan Banks and to promulgate and enforce such regulations and orders as are necessary from time to time to carry out the provisions of this Act. “(2) To suspend or remove for cause a director, officer, employee, or agent of any Federal Home Loan Bank or joint office. The cause of such suspension or removal shall be communicated in writing to such director, officer, employee, or agent and to such Bank or joint office. Notwithstanding any other provision of this Act, no officer, employee, or agent of a Bank or joint office shall be a Federal officer or employee under any definition of either term in title 5, United States Code. “(3) To determine necessary expenditures of the Board under this Act and the manner in which such expenditures shall be incurred, allowed, and paid. “(4) To use the United States mails in the same manner and under the same conditions as a department or agency of the United States. “(b) Staff.— “(1) Board staff.— Subject to title IV of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board may employ, direct, and fix the compensation and number of employees, attorneys, and agents of the Federal Housing Finance Board, except that in no event shall the Board delegate any function to any employee, administrative unit of any Bank, or joint office of the Federal Home Loan Bank System. The prohibition contained in the preceding sentence shall not apply to the delegation of ministerial functions including issuing consolidated obligations pursuant to section 11(b). In directing and fixing such compensation, the Board shall consult with and maintain comparability with the compensation at the Federal bank regulatory agencies. Such compensation shall be paid without regard to the provisions of other laws applicable to officers or employees of the United States, except the Chairperson and other Directors shall be compensated as prescribed in sections 5314 and 5315 of title 5, United States Code, respectively. “(2) Abolition of joint offices.— The joint or collective offices of the Federal Home Loan Bank System, except for the Office of Finance, are hereby abolished. “(c) Receipts of the Board.— Receipts of the Board derived from assessments levied upon the Federal Home Loan Banks and from other sources (other than receipts from the sale of consolidated Federal Home Loan Bank bonds and debentures issued under section 11 of this Act) shall be deposited in the Treasury of the United States. Salaries of the directors and other employees of the Board and all other expenses thereof may be paid from such assessments or other sources and shall not be construed to be Government Funds or appropriated monies, or subject to apportionment for the purposes of chapter 15 of title 31, United States Code, or any other authority. “(d) Annual Report.— The Board shall make an annual report to the Congress.”. (b) Audits and Reports.— Section 20 of the Federal Home Loan Bank Act (12 U.S.C. 1440) is amended by adding at the end the following: “In addition to such examinations, the Comptroller General may audit or examine the Board and the Banks, to determine the extent to which the Board and the Banks are fairly and effectively fulfilling the purposes of this Act.”. (c) Appointment of Inspector General.— Section 8E(a)(2) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking “Federal Home Loan Bank Board,“ and inserting “Federal Housing Finance Board,”. SEC. 703. TERMINATION OF THE FEDERAL HOME LOAN BANK BOARD. (a) In General.— Section 17 of the Federal Home Loan Bank Act (12 U.S.C. 1437) is hereby repealed. SEC. 704. ELIGIBILITY FOR MEMBERSHIP. (a) Insured Depository Institutions.— Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 1424(a)) is amended to read as follows: “(a) Criteria for Eligibility.— “(1) In general.— Any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, savings bank, or any insured depository institution (as defined in section 2 of this Act), shall be eligible to become a member of a Federal Home Loan Bank if such institution— “(A) is duly organized under the laws of any State or of the United States; “(B) is subject to inspection and regulation under the banking laws, or under similar laws, of the State or of the United States; and “(C) makes such home mortgage loans as, in the judgment of the Board, are long-term loans (except that in the case of a savings bank, this subparagraph applies only if, in the judgment of the Board, its time deposits, as defined in section 19 of the Federal Reserve Act, warrant its making such loans). “(2) Qualified thrift lender.— An insured depository institution that is not a member on January 1, 1989, may become a member of a Federal Home Loan Bank only if— “(A) the insured depository institution has at least 10 percent of its total assets in residential mortgage loans; “(B) the insured depository institution’s financial condition is such that advances may be safely made to such institution; and “(C) the character of its management and its home-financing policy are consistent with sound and economical home financing. An insured depository institution commencing its initial business operations after January I, 1989, may become a member of a Federal Home Loan Bank if it complies with regulations and orders prescribed by the Board for the 10 percent asset requirement (described in the preceding sentence) within one year after the commencement of its operations.”. (c) Repeal of Section 27.— Section 27 of the Federal Home Loan Bank Act (12 U.S.C. 1447) is hereby repealed. SEC. 705. REPEAL OF PROVISION RELATING TO RATE OF INTEREST ON DEPOSITS. Section 5B of the Federal Home Loan Bank Act (12 U.S.C. 1425b) is hereby repealed. SEC. 706. CAPITAL STOCK. Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426) is amended— (1) by striking subsections (a), (e), (f), and (g) and redesignating subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), (b), (c), (d), (e), (f), (g), and (h), respectively; (2) by striking the second sentence of subsection (e) (as redesignated by paragraph (1) of this section) and inserting the following: “If any member’s membership in a Federal Home Loan Bank is terminated, the indebtedness of such member to the Federal Home Loan Bank shall be liquidated in an orderly manner (as determined by the Federal Home Loan Bank), and upon completion of such liquidation, the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled. Any such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties or other fees applicable to such prepayment.”; and (3) in subsection (h) (as redesignated by paragraph (1) of this section), by striking “charter” and all that follows through the end period and inserting “charter as a Federal savings association (as defined in section 3 of the Federal Deposit Insurance Act).”. SEC. 707. ELECTION OF BANK DIRECTORS. Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is amended— (1) in subsection (a)— (A) by striking “appointed by the Federal Home Loan Bank Board referred to in subsection (b) of section 17, hereinafter in this section referred to as the Board” and inserting “appointed by the Board referred to in section 2A”, (B) by inserting after the last sentence the following: “At least 2 of the Federal Home Loan Bank directors who are appointed by the Board shall be representatives chosen from organizations with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections. No Federal Home Loan Bank director who is appointed pursuant to this subsection may, during such Bank director’s term of office, serve as an officer of any Federal Home Loan Bank or a director or officer of any member of a Bank, or hold shares, or any other financial interest in, any member of a Bank.”; (2) by inserting after the first sentence of subsection (b) the following: “No person who is an officer or director of a member that fails to meet any applicable capital requirement is eligible to hold the office of Federal Home Loan Bank director.”; (3) by amending subsection (f) to read as follows: “(f) Vacancies.— “(1) In general.— A Bank director appointed or elected to fill a vacancy shall be appointed or elected for the unexpired term of his or her predecessor in office. “(2) Appointed bank directors.— In the event of a vacancy in any appointive Bank directorship, such vacancy shall be filled through appointment by the Board for the unexpired term. If any appointive Bank director shall cease to have the qualifications set forth in subsection (a), the office held by such person shall immediately become vacant, but such person may continue to act as a Bank director until his or her successor assumes the vacated office or the term of such office expires, whichever occurs first. “(3) Elected bank directors.— In the event of a vacancy in any elective Bank directorship, such vacancy shall be filled by an affirmative vote of a majority of the remaining Bank directors, regardless of whether such remaining Bank directors constitute a quorum of the Bank’s board of directors. A Bank director so elected shall satisfy the requirements for eligibility which were applicable to his predecessor. If any elective Bank director shall cease to have any qualification set forth in this section, the office held by such person shall immediately become vacant, and such person shall not continue to act as a Bank director.”; and (4) by adding at the end the following new subsection: “(k) Indemnification of Directors, Officers, and Employees.— The board of directors of each Bank shall determine the terms and conditions under which such Bank may indemnify its directors, officers, employees or agents.”. SEC. 708. REPEAL OF PROVISIONS RELATING TO CERTAIN POWERS OF THE FEDERAL HOME LOAN BANK BOARD. Section 19 of the Federal Home Loan Bank Act (12 U.S.C. 1439) is hereby repealed. SEC. 709. POWERS AND DUTIES OF BANKS. Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended— (1) in subsection (e)(1), by inserting “incidental to activities” after “not”; (2) in subsection (f), by striking out “or whenever in the judgment of at least 4 members of the board an emergency exists requiring such action”; (3) by amending subsection (k) to read as follows: “(k) Bank Loans to SAIF.— “(1) Loans authorized.— Subject to paragraph (3), the Federal Home Loan Banks may, upon the request of the Federal Deposit Insurance Corporation, make loans to such Corporation for the use of the Savings Association Insurance Fund. “(2) Liability of the fund.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall be a direct liability of the Savings Association Insurance Fund. “(3) Interest on and security for such loans.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall— “(A) bear a rate of interest not less than such Bank’s current marginal cost of funds, taking into account the maturities involved; and “(B) be adequately secured.”. SEC. 710. ELIGIBILITY OF BORROWERS TO SECURE ADVANCES. (a) In General.— Section 9 of the Federal Home Loan Bank Act (12 U.S.C. 1429) is amended by striking “or nonmember borrower” in the first sentence. (b) Conforming Amendments.— The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended— (1) in sections 2(5) and 4(b), by striking “or a nonmember borrower” wherever it appears; (2) in section 6(e) (as redesignated by section 706 of this Act), by striking “or nonmember borrower” wherever it appears; (3) in section 6(e) (as redesignated by section 706 of this Act), by striking “or deprive any non member borrower of the privilege of further advances,”; (4) in sections 7Q) and 10(c), by striking “or nonmember borrower” wherever it appears; (5) in section 10(c), by striking “, or made to a nonmember borrower” in the second sentence; and (6) in sections 11(g) and 11(h), by striking “or nonmember borrowers” wherever it appears. (c) Community Support.— Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) is amended by adding at the end the following: “(g) Community Support Requirements.— “(1) In general.— Before the end of the 2-year period beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board shall adopt regulations establishing standards of community investment or service for members of Banks to maintain continued access to long-term advances. “(2) Factors to be included.— The regulations promulgated pursuant to paragraph (1) shall take into account factors such as a member’s performance under the Community Reinvestment Act of 1977 and the member’s record of lending to first-time homebuyers.”. SEC. 711. ADMINISTRATIVE EXPENSES. Section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 1437(b)) is amended to read as follows: 12 USC 1438. “(b) Assessments for Administrative Expenses.— “(1) In general.— The Board may impose a semiannual assessment on the Federal Home Loan Banks, the aggregate amount of which is sufficient to provide for the payment of the Board’s estimated expenses for the period for which such assessment is made. “(2) Deficiencies.— If, at any time, amounts available from any assessment for any semiannual period are insufficient to cover the expenses of the Board incurred in carrying out the provisions of this Act during such period, the Board may make an immediate assessment against the Banks to cover the amount of the deficiency for such semiannual period. “(3) Surpluses.— If, at the end of any semiannual period for which an assessment is made, any amount remains from such assessment, such amount will be deducted from the assessment on the Banks by the Board for the following semiannual period. “(4) Transition provision.— On or after the effective date of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Board may levy a one-time special assessment on the Banks pursuant to this subsection for the Board’s estimated expenses for the transitional period following enactment of such Act, if such assessment is made before the Board’s first semiannual assessment under paragraph (1).”. SEC. 712. NONADMINISTRATIVE EXPENSES. Subsection (a) of section 18 of the Federal Home Loan Bank Act (12 U.S.C. 1438(a)) and section 19A of such Act (12 U.S.C. 1439–1) are hereby repealed. SEC. 713. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION INDUSTRY ADVISORY COMMITTEE. Subsection (i) of section 21 of the Federal Home Loan Bank Act (12 U.S.C. 1441) is repealed and subsections (i), (k), and (1) are redesignated subsections (i), (j), and (k), respectively. SEC. 714. ADVANCES. (a) In General.— Subsection (a) of section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430(a)) is amended by striking everything after “members” to the end period and inserting the following “upon collateral sufficient, in the judgment of the Bank, to fully secure advances obtained from the Bank under this section or section 11(g) of this Act. All long-term advances shall only be made for the purpose of providing funds for residential housing finance. A Bank, at the time of origination or renewal of a loan or advance, shall obtain and maintain a security interest in collateral eligible pursuant to one or more of the following categories: “(1) Fully disbursed, whole first mortgages on improved residential property (not more than 90 days delinquent), or securities representing a whole interest in such mortgages. “(2) Securities issued, insured, or guaranteed by the United States Government or any agency thereof (including without limitation, mortgage-backed securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Corporation, and the Government National Mortgage Association). “(3) Deposits of a Federal Home Loan Bank. “(4) Other real estate related collateral acceptable to the Bank if such collateral has a readily ascertainable value and the Bank can perfect its interest in the collateral. The aggregate amount of outstanding advances secured by such other real estate related collateral shall not exceed 30 percent of such member’s capital. “(5) Paragraphs (1) through (4) shall not affect the ability of any Federal Home Loan Bank to take such steps as it deems necessary to protect its security position with respect to outstanding advances, including requiring deposits of additional collateral security, whether or not such additional security would be eligible to originate an advance. If an advance existing on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 matures and the member does not have sufficient eligible collateral to fully secure a renewal of such advance, a Bank may renew such advance secured by such collateral as the Bank and the Board determines is appropriate. A member that has an advance secured by such insufficient eligible collateral must reduce its level of outstanding advances promptly and prudently in accordance with a schedule determined by the Board.“. (b) Reduced Eligibility for Advances.— Section 10(e) of the Federal Home Loan Bank Act (12 U.S.C. 1430(e)) is amended to read as follows: “(e) Qualified Thrift Lender Status.— “(1) In general.— A member that is not a qualified thrift lender may only receive an advance if it holds stock in its Federal Home Loan Bank at the time it receives that advance in an amount equal to at least— “(A) 5 percent of that member’s total advances, divided by “(B) such member’s actual thrift investment percentage. Such members that are not qualified thrift lenders may only apply for advances under this section for the purpose of obtaining funds for housing finance. “(2) Priority.— The Board, by regulation, shall establish a priority for advances to members that are qualified thrift lenders. The aggregate amount of any Bank’s advances to members that are not qualified thrift lenders shall not exceed 30 percent of a Bank’s total advances. “(3) Minimum stock purchase requirement for membership.— Each member of a Federal Home Loan Bank shall, at a minimum, purchase and maintain stock in its Federal Home Loan Bank in the amount that would be required under section 6(b) if at least 30 percent of such member’s assets were home mortgage loans. “(4) Exceptions.— Paragraphs (1) and (2) of this subsection do not apply to— “(A) a savings bank as defined in section 3 of the Federal Deposit Insurance Act; or “(B) a Federal savings association in existence as a Federal savings association on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989— “(i) that was chartered as a savings bank or cooperative bank prior to October 15, 1982; or “(ii) that acquired its principal assets from an institution which was chartered prior to October 15, 1982, as a savings bank or cooperative bank under State law. “(5) Definitions.— As used in this subsection— “(A) Savings association.— The term ‘savings association’ has the same meaning as in section 10(a)(1)(A) of the Home Owners’ Loan Act. “(B) Qualified thrift lender.— The term ‘qualified thrift lender’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act. “(C) Actual thrift investment percentage.— The term ‘actual thrift investment percentage’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act.”. (c) Special Liquidity Advances.— Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as amended by section 710(c) of this Act) is amended by adding at the end the following new subsection: “(h) Special Liquidity Advances.— “(1) In general.— Subject to paragraph (2), the Federal Home Loan Banks may, upon the request of the Director of the Office of Thrift Supervision, make short-term liquidity advances to a savings association that— “(A) is solvent but presents a supervisory concern because of such association’s poor financial condition; and “(B) has reasonable and demonstrable prospects of returning to a satisfactory financial condition. “(2) Interest on and security for special liquidity advances.— Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall be subject to all applicable collateral requirements, including the requirements of section 10(a) of this Act, and shall be at an interest rate no less favorable than those made available for similar short-term liquidity advances to savings associations that do not present such supervisory concern.”. SEC. 715. AMENDMENTS RELATING TO WITHDRAWAL FROM FEDERAL HOME LOAN BANK MEMBERSHIP. Section 6(h) of the Federal Home Loan Bank Act (as redesignated by section 706 of this Act) is amended by striking “five” and inserting “10”. SEC. 716. REPEAL OF PROVISIONS RELATING TO LAWFUL CONTRACT RATE. Section 5 of the Federal Home Loan Bank Act (12 U.S.C. 1425) is hereby repealed. SEC. 717. BANK STOCK AND OBLIGATIONS. Section 23 of the Federal Home Loan Bank Act (12 U.S.C. 1443) is amended to read as follows: “SEC. 23. FORMS OF BANK STOCK AND OBLIGATIONS. “Any stock, debentures, bonds, notes, or other obligations issued under the authority of this Act may be issued in uncertificated form, utilizing a book entry method, or in certificated form under such rules, regulations, or guidelines as the Board of Directors of the Federal Housing Finance Board may provide.”. SEC. 718. THRIFT ADVISORY COUNCIL. Section 8a of the Federal Home Loan Bank Act (12 U.S.C. 1428a) is hereby repealed. SEC. 719. EXAMINATION OF MEMBERS. Section 22 of the Federal Home Loan Bank Act (12 U.S.C. 1442) is amended to read as follows: “SEC 22. MEMBER FINANCIAL INFORMATION. “(a) In General.— In order to enable the Federal Home Loan Banks to carry out the provisions of this Act, the Secretary of the Treasury, the Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, the Chairperson of the Federal Deposit Insurance Corporation, the Chairperson of the National Credit Union Administration, and the Director of the Office of Thrift Supervision, upon request by any Federal Home Loan Bank— “(1) shall make available in confidence to any Federal Home Loan Bank, such reports, records, or other information as may be available, relating to the condition of any member of any Federal Home Loan Bank or any institution with respect to which any such Bank has had or contemplates having transactions under this Act; and “(2) may perform through their examiners or other employees or agents, for the confidential use of the Federal Home Loan Bank, examinations of institutions for which such agency is the appropriate Federal banking regulatory agency. Reports. In addition, the Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, the Chairperson of the National Credit Union Administration, and the Director of the Office of Thrift Supervision shall make available to the Board or any Federal Home Loan Bank the financial reports filed by members of any Bank to enable the Board or a Bank to compile and publish cost of funds indices or other financial or statistical reports. “(b) Consent by Members.— Every member of a Federal Home Loan Bank shall, as a condition precedent thereto, be deemed— “(1) to consent to such examinations as the Bank or the Board may require for the purposes of this Act; “(2) to agree that reports of examinations by local. State, or Federal agencies or institutions may be furnished by such authorities to the Bank or the Board upon request; and “(3) to agree to give the Bank or the Federal agency, upon request, such information as they may need to compile and publish cost of funds indices and to publish other reports or statistical summaries pertaining to the activities of Bank members.”. SEC. 720. LIQUIDITY. Section 5A of the Federal Home Loan Bank Act (12 U.S.C. 1425a) is hereby repealed. SEC. 721. AFFORDABLE HOUSING. Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as amended by section 710 and section 714 of this Act) is amended by adding at the end the following: “(i) Community Investment Program.— “(1) In general.— Each Bank shall establish a program to provide funding for members to undertake community-oriented mortgage lending. Each Bank shall designate a community investment officer to implement community lending and affordable housing advance programs of the Banks under this subsection and subsection (j) and provide technical assistance and outreach to promote such programs. Advances under this program shall be priced at the cost of consolidated Federal Home Loan Bank obligations of comparable maturities, taking into account reasonable administrative costs. “(2) Communityoriented mortgage lending.— For purposes of this subsection, the term ‘community-oriented mortgage lending’ means providing loans— “(A) to finance home purchases by families whose income does not exceed 115 percent of the median income for the area, “(B) to finance purchase or rehabilitation of housing for occupancy by families whose income does not exceed 115 percent of median income for the area, “(C) to finance commercial and economic development activities that benefit low- and moderate-income families or activities that are located in low- and moderate-income neighborhoods, and “(D) to finance projects that further a combination of the purposes described in subparagraphs (A) through (C). “(j) Affordable Housing Program.— “(1) In general.— Pursuant to regulations promulgated by the Board, each Bank shall establish an Affordable Housing Program to subsidize the interest rate on advances to members engaged in lending for long term, low- and moderate-income, owner-occupied and affordable rental housing at subsidized interest rates. “(2) Standards.— The Board’s regulations shall permit Bank members to use subsidized advances received from the Banks to— “(A) finance homeownership by families with incomes at or below 80 percent of the median income for the area; or “(B) finance the purchase, construction, or rehabilitation of rental housing, at least 20 percent of the units of which will be occupied by and affordable for very low-income households for the remaining useful life of such housing or the mortgage term. “(3) Priorities for making advances.— In using advances authorized under paragraph (1), each Bank member shall give prior it y to qualified projects such as the following: “(A) purchase of homes by families whose income is 80 percent or less of the median income for the area, “(B) purchase or rehabilitation of housing owned or held by the United States Government or any agency or instrumentality of the United States; and “(C) purchase or rehabilitation of housing sponsored by any nonprofit organization, any State or political subdivision of any State, any local housing authority or State housing finance agency. “(4) Report.— Each member receiving advances under this program shall report annually to the Bank making such advances concerning the member’s use of advances received under this program. “(5) Contribution to program.— Each Bank shall annually contribute the percentage of its annual net earnings prescribed in the following subparagraphs to support subsidized advances through the Affordable Housing Program: “(A) In 1990, 1991, 1992, and 1993, 5 percent of the preceding year’s net income, or such prorated sums as may e required to assure that the aggregate contribution of all the Banks shall not be less than $50,000,000 for each such year. “(B) In 1994, 6 percent of the preceding year’s net income, or such prorated sum as may be required to assure that the aggregate contribution of the Banks shall not be less than $75,000,000 for such year. “(C) In 1995, and subsequent years, 10 percent of the preceding year’s net income, or such prorated sums as may be required to assure that the aggregate contribution of the Banks shall not be less than $100,000,000 for each such year. “(6) Grounds for Suspending Contributions — “(A) In general.— If a Bank finds that the payments required under this paragraph are contributing to the financial instability of such Bank, it may apply to the Federal Housing Finance Board for a temporary suspension of such payments. “(B) Financial instability.— In determining the financial instability of a Bank, the Federal Housing Finance Board shall consider such factors as (i) whether the Bank’s earnings are severely depressed, (ii) whether there has been a substantial decline in membership capital, and (iii) whether there has been a substantial reduction in advances outstanding. “(C) Review.— The Board shall review the application and any supporting financial data and issue a written decision approving or disapproving such application. The Board’s decision shall be accompanied by specific findings and reasons for its action. “(D) Monitoring suspension.— If the Board grants a suspension, it shall specify the period of time such suspension shall remain in effect and shall continue to monitor the Bank’s financial condition during such suspension. “(E) Limitations on grounds for suspension.— The Board shall not suspend payments to the Affordable Housing Program if the Bank’s reduction in earnings is a result of (i) a change in the terms for advances to members which is not justified by market conditions, (ii) inordinate operating and administrative expenses, or (iii) mismanagement. “(F) The Federal Housing Finance Board shall notify the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate not less than 60 days before such suspension takes effect. Such suspension shall become effective unless a joint resolution is enacted disapproving such suspension. “(7) Failure to use amounts for affordable housing.— If any Bank fails to utilize or commit the full amount provided in this subsection in any year, 90 percent of the amount that has not been utilized or committed in that year shall be deposited by the Bank in an Affordable Housing Reserve Fund administered by the Board. The 10 percent of the unutilized and uncommitted amount retained by a Bank should be fully utilized or committed by that Bank during the following year and any remaining portion must be deposited in the Affordable Housing Reserve Fund. Under regulations established by the Board, funds from the Affordable Housing Reserve Fund may be made available to any Bank to meet additional affordable housing needs in such Bank’s district pursuant to this section. “(8) Net earnings.— The net earnings of any Federal Home Loan Bank shall be determined for purposes of this paragraph— “(A) after reduction for any payment required under section 21 or 21B of this Act; and “(B) before declaring any dividend under section 16. “(9) Regulations.— The Federal Housing Finance Board shall promulgate regulations to implement this subsection. Such regulations shall, at a minimum— “(A) specify activities eligible to receive subsidized advances from the Banks under this program; “(B) specify priorities for the use of such advances; “(C) ensure that advances made under this program will be used only to assist projects for which adequate Long-term monitoring is available to guarantee that affordability standards and other requirements of this subsection are satisfied; “(D) ensure that a preponderance of assistance provided under this subsection is ultimately received by low- and moderate-income households; “(E) ensure that subsidies provided by Banks to member institutions under this program are passed on to the ultimate borrower; “(F) establish uniform standards for subsidized advances under this program and subsidized lending by member institutions supported by such advances, including maximum subsidy and risk limitations for different categories of loans made under this subsection; and “(G) coordinate activities under this subsection with other Federal or federally-subsidized affordable housing activities to the maximum extent possible. “(10) Other programs.— No provision of this subsection or subsection (i) shall preclude any Bank from establishing additional community investment cash advance programs or contributing additional sums to the Affordable Housing Reserve Fund. “(11) Advisory council.— Each Bank shall appoint an Advisory Council of 7 to 15 persons drawn from community and nonprofit organizations actively involved in providing or promoting low- and moderate-income housing in its district. The Advisory Council shall meet with representatives of the board of directors of the Bank quarterly to advise the Bank on low- and moderate-income housing programs and needs in the district and on the utilization of the advances for these purposes. Each Advisory Council established under this paragraph shall submit to the Board at least annually its analysis of the low-income housing activity of the Bank by which it is appointed. “(12) Reports to congress.— “(A) The Board shall monitor and report annually to the Congress and the Advisory Council for each Bank the support of low-income housing and community development by the Banks and the utilization of advances for these purposes. “(B) The analyses submitted by the Advisory Councils to the Board under paragraph (11) shall be included as part of the report required by this paragraph. “(C) The Comptroller General of the United States shall audit and evaluate the Affordable Housing Program established by this subsection after such program has been operating for 2 years. The Comptroller General shall report to Congress on the conclusions of the audit and recommend improvements or modifications to the program. “(13) Definitions.— For purposes of this subsection— “(A) Low- or moderate-income household.— The term ‘low- or moderate-income household’ means any household which has an income of 80 percent or less of the area median. “(B) Very low-income household.— The term ‘very low-income household’ means any household that has an income of 50 percent or less of the area median. “(C) low- or moderate-income neighborhood.— The term ‘low- or moderate-income neighborhood’ means any neighborhood in which 51 percent or more of the households are low- or moderate-income households. “(D) Affordable for very-low income households.— For purposes of paragraph (2)(B) the term ‘affordable for very-low income households’ means that rents charged to tenants for unite made available for occupancy by low-income families shall not exceed 30 percent of the adjusted income of a family whose income equals 50 percent of the income for the area (as determined by the Secretary of Housing and Urban Development) with adjustment for family size.”. SEC. 722. TRANSFERRED EMPLOYEES OF FEDERAL HOME LOAN RANKS AND JOINT OFFICES. (a) In General.— Each employee of the Federal Home Loan Banks or joint offices of such Banks performing a function identified for transfer under section 403 of this Act, including employees who otherwise would be ineligible for employment by the United States because of their citizenship, shall be transferred for employment not later than 60 days after the date of the enactment of this Act. (b) Notice to Employees.— Transferring employees shall receive notice of their position assignments not later than 120 days after the effective date of their transfer. (c) Guaranteed Position.— Each transferred employee shall be guaranteed a position with the same status and tenure as that held by such employee on the day immediately preceding the transfer. Each such employee holding a permanent position shall not be involuntarily separated for one year after the date of transfer, except for cause. (d) Pay and Benefits.— Each employee transferred under this section shall be entitled to receive, during the one-year period immediately following the transfer, pay and benefits comparable to those received by such employee immediately preceding the transfer. Where necessary or appropriate to further the safety and soundness of the thrift industry, the employing agency may continue the pre-transfer compensation of any transferring employee for up to 2 years beyond the expiration of the period provided for under the preceding sentence. Such pay and benefits shall be subject to the comparability provisions of this Act. Any transferred employee who suffers a reduction of pay or benefits as a result of such comparability provisions shall be compensated for such reduction during the 1 year period following the transfer by assessments from the Federal Home Loan Bank or joint office of such Banks, from which the employee transferred. In any event, this subsection shall only apply to a transferred employee while such employee remains with the agency to which the employee is transferred. (e) Health Insurance.— If the health insurance program of a transferred employee is not continued by the agency to which the employee is transferred, such employee may elect to participate in the agency’s health insurance program notwithstanding health conditions preexisting at the time of election or enrollment into an alternate health insurance program of the agency to which he or she is transferred and without regard to any other regularly scheduled open season. Such election shall be made within 30 days of the transfer. (f) Equitable Treatment.— The Director of the Office of Thrift Supervision or the Chairperson of the Federal Housing Finance Board shall take such action as is necessary on a case-by-case basis so that employees transferring under this section receive equitable treatment regarding credit for prior service with a Federal entity or instrumentality, or with a Federal Home Loan Bank or joint office of such Banks, with respect to the transferring employees’ retirement accounts and the transferring employees’ accrued leave or vacation time, in recognition of the transferring employees’ supervisory service. (g) Special Rule for Certain Annuitants.— An individual who was a reemployed annuitant on July 26, 1989, and who is transferred under this section, shall not be subject to the deduction from pay required by section 8344 or 8468 of title 5, United States Code, during the 1-year period beginning on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. SEC. 723. TRANSITIONAL PROVISIONS. (a) Federal Home Loan Banks’ Share of Administrative Expenses.— The Federal Home Loan Banks shall pay to the Director of the Office of Thrift Supervision the amount obtained by multiplying the administrative expenses of the Office of Thrift Supervision incurred in connection with functions of the Banks that are trans-ferred to the Office (less any fees or assessments collected by the Office) by a fraction— (1) the numerator of which is the amount of such expenses of the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation paid by the Banks during the 1-year period ending on the date of enactment of this Act; and (2) the denominator of which is the total expenses of such Board and Corporation during such period. No payment under this subsection is required after December 31, 1989. (b) Compensation of Supervisory and Examinations Employees.— The Federal Home Loan Banks shall continue to pay the compensation of employees of the Federal Home Loan Banks or the joint offices of such banks who, on the day before the date of the enactment of this Act, are performing supervisory and examination functions until such supervisory and examination functions are transferred under this Act. Thereafter, the obligation of the Federal Home Loan Banks hereunder to pay such applicable compensation shall continue until the later of— (1) the date which is 120 days after the date of transfer of such supervisory and examination functions to the Office of Thrift Supervision, or (2) March 31, 1990. Payment of such compensation by the Federal Home Loan Banks shall be in lieu of, and not in addition to, the payment of compensation by the Office of Thrift Supervision. (c) Facilities and Support Services.— Until December 31, 1990, the Federal Home Loan Banks, as necessary, shall (with respect to supervisory and examination functions performed by employees transferred from the Federal Home Loan Banks or joint offices of such Banks to the Office of Thrift Supervision), provide the Office of Thrift Supervision facilities and support services comparable to those presently provided for the employees of the Federal Home Loan Banks or joint offices of such Banks performing such supervisory and examination functions, including office space, furniture and equipment, computer, personnel, and other support services. With respect to supervisory and examination functions presently performed by employees of individual Federal Home Loan Banks, each such Bank will only be required to provide such facilities and support services to the extent that the functions continue to be performed in that Bank’s offices. (d) Principal Supervisory Agent.— Beginning on the date of enactment of this Act until the Director of the Office of Thrift Supervision shall otherwise provide, the Principal Supervisory Agent for each Federal Home Loan Bank district shall be the senior supervisory official (other than the President of the Federal Home Loan Bank) employed by the Federal Home Loan Bank in such district on the day before the date of the enactment of this Act, and such employees performing supervisory and examination functions shall continue to be responsible for the supervision and examination of savings associations within such district. SEC. 724. FEDERAL HOME LOAN BANK RESERVES. (a) In General.— Section 16(a) of the Federal Home Loan Bank Act (12 U.S.C. 1436(a)) is amended— (1) by striking the first three sentences and inserting in lieu thereof: “Each Federal Home Loan Bank may carry to a reserve account from time-to-time such portion of its net earnings as may be determined by its board of directors.”; and (2) by striking the fifth sentence and inserting the following: “No dividends shall be paid except out of net earnings remaining after reductions for all reserves, chargeoffs, purchases of capital certificates of the Financing Corporation, and payments relating to the Funding Corporation required under this Act have been provided for, other than chargeoffs or expenses incurred by a Bank in connection with the purchase of capital stock of the Financing Corporation under section 21 or payments relating to the Funding Corporation Principal Fund under section 21B(e), and then only with the approval of the Federal Housing Finance Board. Beginning on January 1, 1992, Effective date. the preceding sentence shall be applied by substituting ‘previously retained earnings or current net earnings’ for ‘net earnings’.”. (b) Effective Date.— The amendment made by subsection (a)(1) 12 USC 1436 note. shall take effect on January 1, 1992. SEC. 725. SPECIAL ACCOUNT. At the time of dissolution of the Federal Home Loan Bank Board, all such moneys and funds as shall remain in the special deposit account of the Federal Home Loan Bank Board, or other such accounts, shall become the property of the Federal Housing Finance Board. Subtitle B— Federal Home Loan Mortgage Corporation SEC. 731. FEDERAL HOME LOAN MORTGAGE CORPORATION. (a) Statement of Purpose.— (1) In general.— Section 301 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 note) is amended— (A) by inserting “(a)” after the section designation; and (B) by adding at the end the following new subsection: “(b) It is the purpose of the Federal Home Loan Mortgage Corporation— “(1) to provide stability in the secondary market for home mortgages; “(2) to respond appropriately to the private capital market; and “(3) to provide ongoing assistance to the secondary market for home mortgages (including mortgages securing housing for low- and moderate-income families involving a reasonable economic return to the Corporation) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for home mortgage financing.”. (2) Conforming amendment.— The section heading for section 301 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 note) is amended to read as follows: (b) Board of Directors.— (1) New board.— Section 303(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(a)) is amended to read as follows: “(a) (1) There is hereby created the Federal Home Loan Mortgage Corporation, which shall be a body corporate under the direction of a Board of Directors. Within the limitations of law and regulation, the Board of Directors shall determine the general policies that District of Columbia. govern the operations of the Corporation, The principal office of the Corporation shall be in the District of Columbia or at any other place determined by the Corporation. “(2) (A) The Board of Directors of the Corporation shall consist of 18 persons, 5 of whom shall be appointed annually by the President of the United States and the remainder of whom shall be elected annually by the voting common stockholders. The Board of Directors shall at all times have as members appointed by the President of the United States at least 1 person from the homebuilding industry, at least 1 person from the mortgage lending industry, and at least 1 person from the real estate industry. “(B) Each member of the Board of Directors shall be such or elected for a term ending on the date of the next annual meeting of the voting common stockholders. “(C) Any appointive seat on the Board of Directors that becomes vacant shall be filled by appointment by the President of the United States, but only for the unexpired portion of the term. Any elective seat on the Board of Directors that becomes vacant after the annual election of the directors shall be filled by the Board of Directors, but only for the unexpired portion of the term. “(D) Any member of the Board of Directors who is a full-time officer or employee of the Federal Government shall not, as such member, receive compensation for services as such a member.”. (2) Transitional provisions.— (A) Interim board.— (i) Establishment.— There shall be an interim Board of Directors of the Federal Home Loan Mortgage Corporation, which shall serve from the date of the enactment of this Act until the date of the 1st meeting of the voting common shareholders of the Corporation at which the first election of the directors elected by the shareholders occurs. (ii) Members.— The interim Board of Directors of the Federal Home Loan Mortgage Corporation shall consist of— (I) the President of the Corporation; and (II) the persons who were (on the day before the date of the enactment of this Act) the Chairman of the Federal Home Loan Bank Board and the Secretary of Housing and Urban Development (or their designees). (iii) Quorum.— A quorum of the interim Board of Directors of the Federal Home Loan Mortgage Corporation shall consist of a majority of the directors duly serving from time to time. (B) Election of permanent directors.— The first meeting of the voting common shareholders of the Federal Home Loan Mortgage Corporation for election of directors shall occur, under procedures established by the Corporation, within 6 months after the date of the enactment of this Act. (c) Regulatory Power.— Section 303 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452) is amended— (1) by redesignating subsections (b) through (D as subsections (c) through (g), respectively; and (2) by inserting after subsection (a) the following new subsection: “(b) (1) The Secretary of Housing and Urban Development shall have general regulatory power over the Corporation and shall make such rules and regulations as shall be necessary and proper to ensure that the purposes of this title are accomplished. “(2) The Secretary of Housing and Urban Development may require Disadvantaged persons. that a reasonable portion of the mortgage purchases of the Corporation be related to the national goal of providing adequate housing for low- and moderate-income families, but with reasonable economic return to the Corporation. “(3) The aggregate amount of cash dividends paid by the Corporation in any fiscal year on account of any share of its common stock shall not exceed any rate that may be determined from time to time by the Secretary of Housing and Urban Development to be a fair rate of return after consideration of the current earnings and capital condition of the Corporation. “(4) The Secretary of Housing and Urban Development may examine and audit the books and financial transactions of the Corporation and may require the Corporation to issue any reports on its activities that the Secretary determines to be advisable. The Secretary Reports. shall, not later than June 30 of each year, submit to the Congress a report describing the activities of the Corporation under this Act. “(5) The aggregate amount of notes, debentures, or substantially identical types of unsecured obligations outstanding at any time shall not exceed the amount which is 15 times the sum of the Corporation’s capital, capital surplus, general surplus, reserves, and undistributed earnings unless a greater ratio shall be fixed at any time or from time to time by the Secretary of Housing and Urban Development. The outstanding total principal amount of any obligations of the Corporation which are entirely subordinated to the general debt obligations of the Corporation shall be deemed to be capital of the Corporation for the purpose of determining the aggregate amount of notes, debentures, or substantially identical types of unsecured obligations outstanding at any time. “(6) All issuances of stock, and debt obligations convertible into stock, by the Corporation shall be made only with the approval of the Secretary of Housing and Urban Development. “(7) (A) The exercise of the authority of the Corporation pursuant to commitments or otherwise to purchase, service, sell, lend on the security of, or otherwise deal in conventional residential mortgages under section 305(a) shall be subject to the approval of the Secretary of Housing and Urban Development. “(B) Any conventional mortgage programs or activities with respect to purchasing, servicing, selling, lending on the security of, or otherwise dealing in mortgages in which the Corporation has engaged or is engaging as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of Housing and Urban Development as required by this paragraph. “(8) If the Corporation submits to the Secretary of Housing and Reports. Urban Development a request for approval or other action under this title, the Secretary shall, not later than the expiration of the 45-day period following the submission of the request, approve the request or transmit to the Congress a report explaining why the request has not been approved. The period may be extended for an additional 15-day period if the Secretary requests additional information from the Corporation, but the 45-day period may not be extended for any other reason or for any period in addition to or other than the 15-day period. If the Secretary fails to transmit the report to the Congress within the 45-day period or 60-day period, as the case may be, the Corporation may proceed as if the request had been approved.”. (d) Common Stock.— (1) In general.— Section 304(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(a)) is amended to read as follows: “(a) (1) The common stock of the Corporation shall consist of— “(A) non voting common stock, which shall be issued only to Federal home loan banks; and “(B) voting common stock, which shall be issued to such holders in the manner and amount, and subject to any limitations on concentration of ownership, as may be established by the Corporation. “(2) The nonvoting common stock and the voting common stock shall have such par value and other characteristics as the Corporation provides. The voting common stock shall be vested with all voting rights, each share Being entitled to 1 vote. The free transfer-ability of the voting common stock at all times to any person, firm, corporation or other entity shall not be restricted except that, as to the Corporation, it shall be transferable only on the books of the Corporation. Nonvoting common stock of the Corporation shall be evidenced in the manner and shall be transferable only to the extent, to the transferees, and in the manner, provided by the Corporation.”. (2) Conversion of stock.— On the date of the enactment of this Act, each share of outstanding senior participating preferred stock of the Federal Home Loan Mortgage Corporation, with a par value of $2.50 per share, shall be changed into and shall become 1 share of voting common stock of the Corporation. Such voting common stock shall, with respect to the nonvoting common stock of the Corporation, retain all of the rights, priorities and privileges of the senior participating preferred stock. The transformation of the senior participating preferred stock into voting common stock under this paragraph shall be deemed to satisfy the obligation of the Corporation to redeem senior participating preferred stock for non-callable common stock. (3) Conforming amendments.— (A) Subscriptions of federal home loan banks.— Section 304(b) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(b)) is amended by inserting “nonvoting” before “common”. (B) Allocation of subscriptions.— Section 304(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(c)) is amended by striking “such” and by inserting “nonvoting common” before “stock”. (C) Retirement of stock.— Section 304(d) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(d)) is amended by inserting “nonvoting common” before “stock” each place it appears. (e) Mortgage Operations.— (1) Prohibition on fees.— Section 305(a)(1) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(1) is amended by adding at the end the following: “Nothing in this section authorizes the Corporation to impose any charge or fee upon any mortgagee approved by the Secretary of Housing and Urban Development for participation in any mortgage insurance program under the National Housing Act solely because of such status.”. (2) Lending activities.— Section 305(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)) is amended by adding at the end the following new paragraph: “(5) The Corporation is authorized to lend on the security of, and to make commitments to lend on the security of, any mortgage that the Corporation is authorized to purchase under this section. The volume of the Coiporation’s lending activities and the establishment of its loan ratios, interest rates, maturities, and charges or fees in its secondary market operations under this paragraph, shall be determined by the Corporation from time to time; and such determinations shall be consistent with the objectives that the lending activities shall be conducted on such terms as will reasonably prevent excessive use of the Corporation’s facilities, and that the operations of the Corporation under this paragraph shall be within its income derived from such operations and that such operations shall be fully self-supporting. The Corporation shall not be permitted to use its lending authority under this paragraph (A) to advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans. Notwithstanding any Federal, State, or other law to the contrary, the Corporation is hereby empowered, in connection with any loan under this paragraph, whether before or after any default, to provide by contract with the borrower for the settlement or extinguishment, upon default, of any redemption, equitable, legal, or other right, title, or interest of the borrower in any mortgage or mortgages that constitute the security for the loan; and with respect to any such loan, in the event of default and pursuant otherwise to the terms of the contract, the mortgages that constitute such security shall become the absolute property of the Corporation.”. (f) References to FSLIC and FHLBB.— (1) Section 302.— Section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) is amended— (A) in the 4th sentence, by striking out “Federal Savings and Loan Insurance Corporation” and inserting in lieu thereof “Resolution Trust Corporation”; and (B) in the 8th sentence, by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Federal Housing Finance Board”. (2) Section 305.— Section 305 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454) is amended— (A) by striking out “Federal Savings and Loan Insurance Corporation” each place it appears and inserting in lieu thereof “Resolution Trust Corporation”; and (B) in subsection (a)(2), by striking out “Federal Home Loan Bank Board“ and inserting in lieu thereof “Federal Housing Finance Board”. (g) Standby Crédit.— Section 306(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(c)) is amended to read as follows: “(c) (1) The Secretary of the Treasury may purchase any obligations issued under subsection (a). For such purpose, the Secretary may use as a public debt transaction the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under such chapter are extended to include such purpose. “(2) The Secretary of Treasury shall not at any time purchase any obligations under this subsection if the purchase would increase the aggregate principal amount of the outstanding holdings of obligations under this subsection by the Secretary to an amount greater than $2,250,000,000. “(3) Each purchase of obligations by the Secretary of the Treasury under this subsection shall be upon terms and conditions established to yield a rate of return determined by the Secretary to be appropriate, taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the making of the purchase. “(4) The Secretary of the Treasury may at any time sell, upon terms and conditions and at prices determined by the Secretary, any of the obligations acquired by the Secretary under this subsection. “(5) All redemptions, purchases and sales by the Secretary of the Treasury of obligations under this subsection shall be treated as public debt transactions of the United States.”. (h) Preferred Stock.— Section 306(f) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(f)) is amended to read as follows: “(f) The Corporation may have preferred stock on such terms and conditions as the Board of Directors shall prescribe. Any preferred stock shall not be entitled to vote with respect to the election of any member of the Board of Directors.”. (i) Terms of Obligations.— Section 306 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455) is amended by adding at the end the following new subsections: “(j) (1) Any notes, debentures, or substantially identical types of unsecured obligations of the Corporation evidencing money borrowed, whether general or subordinated, shall be issued upon the approval of the Secretary of the Treasury and shall have such maturities and bear such rate or rates of interest as may be determined by the Corporation with the approval of the Secretary of the Treasury. “(2) Any notes, debentures, of substantially identical types of unsecured obligations of the Corporation having maturities of 1 year or less that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 365 days after such date of enactment. “(3) Any notes, debentures, or substantially identical types of unsecured obligations of the Corporation having maturities of more than 1 year that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recov-ery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 60 days after such date of enactment. “(k) (1) Any securities in the form of debt obligations or trust certificates of beneficial interest, or both, and based upon mortgages held and set aside by the Corporation, shall be issued upon the approval of the Secretary of the Treasury and shall have such maturities and shall bear such rate or rates of interest as may be determined by the Corporation with the approval of the Secretary of the Treasury. “(2) Any securities in the form of debt obligations or trust certificates of beneficial interest, or both, and based upon mortgages held and set aside by the Corporation, that the Corporation has issued or is issuing as of the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 shall be deemed to have been approved by the Secretary of the Treasury as required by this subsection.”. (j) State Limitations.— (1) The second sentence of section 307(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(a)) is amended to read as follows; “The Corporation is authorized to conduct its business without regard to any qualification or similar statute in any State.”. (2) The amendment made by this subsection shall not apply to 12 USC 1456 note. any assertion of priority by the Federal Home Loan Mortgage Corporation with respect to any cause of action or claim filed before the date of the enactment of this Act. (k) Penal Provisions.— Section 308 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1457) is amended— (1) in subsection (a), by striking the subsection designation; and (2) by striking subsections (b), (c), (d), (e), and (f). (l) Construction.— Section 310 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1459) is amended— (1) in the section heading, by striking “construction and”; and (2) by striking the first sentence. (m) Conforming Amendments to Federal National Mortgage Association Charter Act.— (1) Statement of purpose.— Section 301 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1716) is amended— (A) by striking paragraphs (a) and (b) and inserting the following new paragraphs; “(1) provide stability in the secondary market for home mortgages; “(2) respond appropriately to the private capital market; “(3) provide ongoing assistance to the secondary market for home mortgages (including mortgages securing housing for low- and moderate-income families involving a reasonable economic return) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for home mortgage financing; and”; and (B) by redesignating paragraph (c) as paragraph (4). (2) Lending activities.— Section 304(a)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719(a)(2)) is amended— (A) by inserting after the 3rd sentence the following new sentence: “The corporation shall not be permitted to use its lending authority (A) to advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans.”; and (B) by striking the 1st and 2d sentences. (3) Audits by gao.— Section 309 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a) is amended by adding at the end the following new subsection: “(j) The mortgage transactions of the corporation may be subject to audit by the Comptroller General of the United States in accordance with the principles and procedures applicable to commercial corporation transactions under such rules and regulations as may be prescribed by the Comptroller General. The representatives of the General Accounting Office shall have access to such books, accounts, financial records, reports, files, and such other papers, things, or property belonging to or in use by the corporation and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by Reports. depositories, fiscal agents, and custodians. A report on each such audit shall be made by the Comptroller General to the Congress. The corporation shall reimburse the General Accounting Office for the full cost of any such audit as billed therefor by the Comptroller General.”. Subtitle C— Technical and Conforming Amendments SEC. 741. REPEAL OF LIMITATION OF OBLIGATION FOR ADMINISTRATIVE EXPENSES. Section 7(b) of the First Deficiency Appropriation Act of 1936 (15 U.S.C. 712a(b)) is amended by striking the following: “(1) Federal Home Loan Bank Board;”; “(2) Home Owners’ Loan Corporation;”; and “(11) Federal Savings and Loan Insurance Corporation;”. SEC. 742. AMENDMENT OF TITLE 5, UNITED STATES CODE. (a) Executive Schedule.— (1) Section 5314 of title 5, United States Code (5 U.S.C. 5315) is amended— (A) by striking “Chairman of the Federal Home Loan Bank Board.”; and (B) by adding at the end thereof the following: “Director of the Office of Thrift Supervision. “Chairperson of the Federal Housing Finance Board.”. (2) Section 5315 of title 5, United States Code (5 U.S.C. 5315) is amended— (A) by striking out “Members, Federal Home Loan Bank Board.”, and (B) by inserting “Directors, Federal Housing Finance Board ”. (b) Limitation on Pay Fixed by Administrative Action.— Section 5373(2) of title 5, United States Code, is amended by inserting after “481,” the following: “1437, 1439,”. (c) Definition of Agency.— Section 3132(a)(1) of title 5, United States Code (5 U.S.C. 3132(a)(1), is amended— (1) in subparagraph (B), by striking “or” after the semicolon; (2) in subparagraph (C), by inserting “or” after the semicolon; and (3) by adding at the end the following: “(D) the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Housing Finance Board, the Resolution Trust Corporation, and the National Credit Union Administration;”. SEC. 743. AMENDMENT OF BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT PROVISIONS. (a) Section 255(g)(1)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended— (1) by inserting after the item relating to the Comptroller of the Currency the following new item: “Director of the Office of Thrift Supervision;”; (2) by striking out “Federal Home Loan Bank Board;” and inserting in lieu thereof the following new items: “Federal Deposit Insurance Corporation, Bank Insurance Fund; “Federal Deposit Insurance Corporation, FSLIC Resolution Fund; “Federal Deposit Insurance Corporation, Savings Association Insurance Fund;”; (3) by striking out “Federal Home Loan Bank Board, Federal Savings and Loan Insurance Corporation” and inserting in lieu thereof “Federal Housing Finance Board”; and (4) by inserting after the item relating to the Postal service fund the following new items: “Resolution Funding Corporation; “Resolution Trust Corporation;”. (b) Section 256(b)(4) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 256(b)(4)) is amended— 2 USC 906. (1) by striking out subparagraph (C) and inserting in lieu thereof the following new subparagraph “(C) Office of Thrift Supervision.”; (2) by striking subparagraph (D) and inserting in lieu thereof the following new subparagraph: “(D) Office of Thrift Supervision.”; and (3) by adding at the end thereof the following new subparagraphs: “(H) Resolution Funding Corporation. “(I) Resolution Trust Corporation.”. (c) Section 255(g)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985 is amended by striking “Federal Savings and Loan Insurance Corporation fund (82–4037–0–3–371);”. SEC. 744. CONFORMING AMENDMENTS TO FINANCIAL INSTITUTION RELATED ACTS. (a) Federal Financial Institutions Examination Council Act.— (1) Section 1003.— Section 1003 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3302) is amended— (A) in paragraph (1), by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Office of Thrift Supervision”; and (B) in paragraph (3), by striking out “savings and loan association” and inserting in lieu thereof “savings association”. (2) Section 1004.— Section 1004(a)(4) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3303(a)(4)) is amended by striking out “Chairman of the Federal Home Loan Bank Board, and” and inserting in lieu thereof “Director, Office of Thrift Supervision”. (3) Section 1006.— Section 1006(d) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3305(d)) is amended in the 2d sentence by inserting “and employees of the Federal Housing Finance Board” after “supervisoiy agencies”. (b) Right to Financial Privacy Act.— Section 1101 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401) is amended— (1) in paragraph (1), by striking out “savings and loan” and inserting in lieu thereof “savings association”; (2) in paragraph (6), by striking out subparagraph (B) and redesignating the remaining subparagraphs as subparagraphs (B) through (H), respectively; and (3) in paragraph (6)(B) (as so redesignated), by striking out “the Federal Home Loan Bank Board” and inserting in lieu thereof “Director, Office of Thrift Supervision”. (c) Alternative Mortgage Transactions Parity Act.— The Alternative Mortgage Transactions Parity Act of 1982 (12 U.S.C. 3801–06) is amended by striking out “Federal Home Loan Bank Board” each place such term appears and inserting in lieu thereof “Director of the Office of Thrift Supervision”. (d) Expedited Funds Availability Act.— Section 610(a)(2) of the Expedited Funds Availability Act (12 U.S.C. 4009(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision in the case of savings associations the deposits of which are insured by the Federal Deposit Insurance Corporation; and”. (e) Paperwork Reduction Act.— Section 2(a)(10) of the Paperwork Reduction Act of 1980 (44 U.S.C. 3502(a)(10)) is amended by striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “the Federal Housing Finance Board”. (f) Federal Property and Administrative Services Act.— Section 602(11) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 474(11)) is amended— (1) by inserting “or the Resolution Trust Corporation” after “Department of Housing and Urban Development”; (2) by striking out “savings and loan accounts” and inserting in lieu thereof “savings association accounts”; and (3) by inserting “under the Federal Deposit Insurance Act or any other law.” after “National Housing Act”. (g) Public Buildings Act.— Section 13(4) of the Public Buildings Act of 1959 (40 U.S.C. 612(d)) is amended by striking out subparagraph (D). (h) Bank Protection Act.— Section 2 of the Bank Protection Act of 1968 (12 U.S.C. 1881) is amended— (1) in paragraph (4), by— (A) striking out “Federal Home Loan Bank Board” and inserting in lieu thereof “Director of the Office of Thrift Supervision”; (B) striking out “and loan”; and (C) striking “associations” and all that follows through “Corporation”; and (2) in paragraph (3), by inserting “and State savings associations” before “, and”. (i) The Federal Reserve Act.— (1) Section 11.— Section 11(a)(2) of the Federal Reserve Act (12 U.S.C. 248(a)(2)) is amended by striking “(iii) Federal Home Loan Bank Board in the case of any institution insured by the Federal Savings and Loan Insurance Corporation” and inserting “(iii) the Director of the Office of Thrift Supervision in the case of any savings association which is an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act)”. (2) Section 19(b).— Section 19(b)(1)(A)(vi) of the Federal Reserve Act (12 U.S.C. 461(b)(1)(A)(vi)) is amended to read as follows: “(vi) any savings association (as defined in section 3 of the Federal Deposit Insurance Act) which is an insured depository institution (as defined in such Act) or is eligible to apply to become an insured depository institution under the Federal Deposit Insurance Act; and”. (3) Section 19.— Section 19 of the Federal Reserve Act (12 U.S.C. 461) is amended by striking out “the Federal Home Loan Bank Board,” and inserting in lieu thereof “the Director of the Office of Thrift Supervision,” each place it appears. (j) Public Law 93–495.— Section 3 of title I of Public Law 93–495 (12 U.S.C. 250) is amended by striking “Federal Home Loan Bank Board” and inserting “Director of the Office of Thrift Supervision”. (k) Truth in Lending Act.— Section 108(a)(2) of the Truth in Lending Act (15 U.S.C. 1607(a)(2)) is amended to read as follows: (2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (l) Fair Credit Reporting Act.— Section 621(b)(2) of the Fair Credit Reporting Act (15 U.S.C. 1681s(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (m) Equal Credit Opportunity Act.— Section 704(a)(2) of the Equal Credit Opportunity Act (15 U.S.C. 1691c(a)(2)) is amended to read as follows: “(2) Section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (n) Fair Debt Collection Practices Act.— Section 814(b)(2) of the Fair Debt Collection Practices Act (15 U.S.C. 1692/(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (o) Electronic Fund Transfer Act.— Section 917(a)(2) of the Electronic Fund Transfer Act (15 U.S.C. 1693o(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”. (p) Home Mortgage Disclosure Act of 1975.— (1) Section 305.— Section 305(b)(2) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2804(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation; and”. (2) Section 306.— Section 306(b)(2) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2805(b)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (3) Section 307.— Section 307 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2806) is amended by striking “Federal Home Loan Bank Board” each place it appears and inserting “Director of the Office of Thrift Supervision”. (q) Community Reinvestment Act of 1977.— Section 803(1)(D) of the Community Reinvestment Act of 1977 (12 U.S.C. 2902(1)(D)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and a savings and loan holding company;”. (r) Depository Institutions Management Interlocks Act.— (1) Section 207(4) of the Depository Institutions Management Interlocks Act (12 U.S.C. 3206(4)) is amended to read as follows: “(4) the Director of the Office of Thrift Supervision with respect to a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and savings and loan holding companies,”. (s) Depository Institutions Deregulation Act of 1980.— Section 208(a)(2) of the Depository Institutions Deregulation Act of 1980 (12 U.S.C. 3507(a)(2)) is amended to read as follows: “(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.”. (t) Federal Trade Commission Act.— Section 18(f)(3) of the Federal Trade Commission Act (Ifî U.S.C. 57a(f)(3)) is amended to read as follows: “(3) Compliance with regulations prescribed under this subsection shall be enforced under section 8 of the Federal Deposit Insurance Act with respect to savings associations as defined in section 3 of the Federal Deposit Insurance Act.”, (u) Securities Exchange Act of 1934.— (1) Section 3.— Section 3(a)(34) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(34)) is amended— (A) in subparagraph (G)— (i) by striking clauses (iv) and (v) and inserting the following: “(iv) the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;”; and (ii) by redesignating clause (vi) as clause (v); and (B) in the second sentence, by striking “the Federal Home Loan Bank Board” and inserting “the Office of Thrift Supervision”. (2) Section 12.— Section 12(i) of the Securities Exchange Act of 1934 (15 U.S.C. 78/(i)) is amended— (A) in the first sentence— (i) by inserting “and savings associations” after “banks” the first place it appears; (ii) by striking “or institutions the accounts of which are insured by the Federal Savings and Loan Insurance Corporation”; and (iii) by striking paragraph (4) and inserting “(4) with respect to savings associations the accounts of which are insured by the Federal Deposit Insurance Corporation are vested tn the Office of Thrift Supervision”; and (B) in the second sentence, by striking “the Federal Home Loan Bank Board” and inserting “the Office of Thrift Supervision”. (5) Section 15.— Section 15C(f)(1) (15 U.S.C. 78o-5(f)(1)) of such Act is amended by striking “Federal Home Loan Bank Board” and inserting “Director of the Office of Thrift Supervision”.

21. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 706(1) · 103 Stat. 183

    1. Redesignated · 12 U.S.C. § 1426(g)

       Pub. L. 101–73, § 706(1), redesignated subsec. (k) as (g)

    2. Struck · 12 U.S.C. § 1426(g)

       Pub. L. 101–73, § 706(1), struck out former subsec. (g) which related to retirement of stock of United States

    Source evidence

    Code amendment note
    Subsec. (g). Pub. L. 101–73, § 706(1), redesignated subsec. (k) as (g) and struck out former subsec. (g) which related to retirement of stock of United States.

    Enacted provision · exact public law section
    (1) by striking subsections (a), (e), (f), and (g) and redesignating subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), (b), (c), (d), (e), (f), (g), and (h), respectively;

22. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 715 · 103 Stat. 183

    Substituted · 12 U.S.C. § 1426(h)

    Pub. L. 101–73, § 715, substituted “10” for “five”

    Source evidence

    Code amendment note
    Subsec. (h). Pub. L. 101–73, § 715, substituted “10” for “five”.

    Enacted provision · exact public law section
    SEC. 715. AMENDMENTS RELATING TO WITHDRAWAL FROM FEDERAL HOME LOAN BANK MEMBERSHIP. Section 6(h) of the Federal Home Loan Bank Act (as redesignated by section 706 of this Act) is amended by striking “five” and inserting “10”.

23. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 706(3) · 103 Stat. 183

    Substituted · 12 U.S.C. § 1426(h)

    Pub. L. 101–73, § 706(3), substituted “charter as a Federal savings association (as defined in section 1813 of this title)” for “charter from the Federal Home Loan Bank Board”

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 101–73, § 706(3), substituted “charter as a Federal savings association (as defined in section 1813 of this title)” for “charter from the Federal Home Loan Bank Board”.

    Enacted provision · exact public law section
    (3) in subsection (h) (as redesignated by paragraph (1) of this section), by striking “charter” and all that follows through the end period and inserting “charter as a Federal savings association (as defined in section 3 of the Federal Deposit Insurance Act).”.

24. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 706(1) · 103 Stat. 183

    Redesignated · 12 U.S.C. § 1426(h)

    Pub. L. 101–73, § 706(1), redesignated subsec. (m) as (h). Former subsec. (h) redesignated (d)

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 101–73, § 706(1), redesignated subsec. (m) as (h). Former subsec. (h) redesignated (d).

    Enacted provision · exact public law section
    (1) by striking subsections (a), (e), (f), and (g) and redesignating subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), (b), (c), (d), (e), (f), (g), and (h), respectively;

25. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 706(1) · 103 Stat. 183

    Redesignated · 12 U.S.C. § 1426(i)(k)

    Pub. L. 101–73, § 706(1), redesignated former subsecs. (i) to (k) as (e) to (g), respectively

    Source evidence

    Code amendment note
    Subsecs. (i) to (k). Pub. L. 101–73, § 706(1), redesignated former subsecs. (i) to (k) as (e) to (g), respectively.

    Enacted provision · exact public law section
    (1) by striking subsections (a), (e), (f), and (g) and redesignating subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), (b), (c), (d), (e), (f), (g), and (h), respectively;

26. 1989

    Financial Institutions Reform, Recovery, and Enforcement Act of 1989

    Pub. L. 101–73 § 706(1) · 103 Stat. 183

    Redesignated · 12 U.S.C. § 1426(m)

    Pub. L. 101–73, § 706(1), redesignated former subsec. (m) as (h)

    Source evidence

    Code amendment note
    Subsec. (m). Pub. L. 101–73, § 706(1), redesignated former subsec. (m) as (h).

    Enacted provision · exact public law section
    (1) by striking subsections (a), (e), (f), and (g) and redesignating subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), (b), (c), (d), (e), (f), (g), and (h), respectively;

27. 1999

    Pub. L. 106–102 title VI § 608 · 113 Stat. 1338

    1. Amended · 12 U.S.C. § 1426

       Pub. L. 106–102 amended section generally

    2. Substituted · 12 U.S.C. § 1426

       Pub. L. 106–102 substituting present provisions for provisions authorizing banks to issue capital stock and providing for minimum subscriptions, retirement of oversubscriptions, cancellation of oversubscriptions, aggregate unpaid loan principal, reports and information, payments for stock, transfer or hypothecation of stock, withdrawal or removal of members, surrender and cancellation of stock, prepayment penalties, disposal of stock, dividends, and acquisition of membership after expiration of period of withdrawal

    Source evidence

    Code amendment note
    Pub. L. 106–102 amended section generally, substituting present provisions for provisions authorizing banks to issue capital stock and providing for minimum subscriptions, retirement of oversubscriptions, cancellation of oversubscriptions, aggregate unpaid loan principal, reports and information, payments for stock, transfer or hypothecation of stock, withdrawal or removal of members, surrender and cancellation of stock, prepayment penalties, disposal of stock, dividends, and acquisition of membership after expiration of period of withdrawal.

    Enacted provision · exact public law section
    SEC. 608. CAPITAL STRUCTURE OF FEDERAL HOME LOAN BANKS. Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426) is amended to read as follows: “SEC. 6. CAPITAL STRUCTURE OF FEDERAL HOME LOAN BANKS. “(a) Regulations.— “(1) Capital standards.— Not later than 1 year after the date of the enactment of the Federal Home Loan Bank System Modernization Act of 1999, the Finance Board shall issue regulations prescribing uniform capital standards applicable to each Federal home loan bank, which shall require each such bank to meet— “(A) the leverage requirement specified in paragraph (2); and “(B) the risk-based capital requirements, in accordance with paragraph (3). “(2) Leverage requirement.— “(A) In general.— The leverage requirement shall require each Federal home loan bank to maintain a minimum amount of total capital based on the total assets of the bank and shall be 5 percent. “(B) Treatment of stock and retained earnings.— In determining compliance with the minimum leverage ratio established under subparagraph (A), the paid-in value of the outstanding Class B stock and the amount of retained earnings shall be multiplied by 1.5, and such higher amounts shall be deemed to be capital for purposes of meeting the 5 percent minimum leverage ratio, except that a Federal home loan bank’s total capital (determined without taking into account any such multiplier) shall not be less than 4 percent of the total assets of the bank. “(3) Risk-based capital standards.— “(A) In general.— Each Federal home loan bank shall maintain permanent capital in an amount that is sufficient, as determined in accordance with the regulations of the Finance Board, to meet— “(i) the credit risk to which the Federal home loan bank is subject; and “(ii) the market risk, including interest rate risk, to which the Federal home loan bank is subject, based on a stress test established by the Finance Board that rigorously tests for changes in market variables, including changes in interest rates, rate volatility, and changes in the shape of the yield curve. “(B) Consideration of other risk-based standards.— In establishing the risk-based standard under subparagraph (A)(ii), the Finance Board shall take due consideration of any risk-based capital test established pursuant to section 1361 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611) for the enterprises (as defined in that Act), with such modifications as the Finance Board determines to be appropriate to reflect differences in operations between the Federal home loan banks and those enterprises. “(4) Other regulatory requirements.— The regulations issued by the Finance Board under paragraph (1) shall— “(A) permit each Federal home loan bank to issue, with such rights, terms, and preferences, not inconsistent with this Act and the regulations issued hereunder, as the board of directors of that bank may approve, any 1 or more of— “(i) Class A stock, which shall be redeemable in cash and at par 6 months following submission by a member of a written notice of its intent to redeem such shares; and “(ii) Class B stock, which shall be redeemable in cash and at par 5 years following submission by a member of a written notice of its intent to redeem such shares; “(B) provide that the stock of a Federal home loan bank may be issued to and held by only members of the bank, and that a bank may not issue any stock other than as provided in this section; “(C) prescribe the manner in which stock of a Federal home loan bank may be sold, transferred, redeemed, or repurchased; and “(D) provide the manner of disposition of outstanding stock held by, and the liquidation of any claims of the Federal home loan bank against, an institution that ceases to be a member of the bank, through merger or otherwise, or that provides notice of intention to withdraw from membership in the bank. “(5) Definitions of capital.— For purposes of determining compliance with the capital standards established under this subsection— “(A) permanent capital of a Federal home loan bank shall include— “(i) the amounts paid for the Class B stock; and “(ii) the retained earnings of the bank (as determined in accordance with generally accepted accounting principles); and “(B) total capital of a Federal home loan bank shall include— “(i) permanent capital; “(ii) the amounts paid for the Class A stock; “(iii) consistent with generally accepted accounting principles, and subject to the regulation of the Finance Board, a general allowance for losses, which may not include any reserves or allowances made or held against specific assets; and “(iv) any other amounts from sources available to absorb losses incurred by the bank that the Finance Board determines by regulation to be appropriate to include in determining total capital. “(6) Transition period.— Notwithstanding any other provision of this Act, the requirements relating to purchase and retention of capital stock of a Federal home loan bank by any member thereof in effect on the day before the date of the enactment of the Federal Home Loan Bank System Modernization Act of 1999, shall continue in effect with respect to each Federal home loan bank until the regulations required by this subsection have taken effect and the capital structure plan required by subsection (b) has been approved by the Finance Board and implemented by such bank. “(b) Capital Structure Plan.— “(1) Approval of plans.— Not later than 270 days after the date of publication by the Finance Board of final regulations in accordance with subsection (a), the board of directors of each Federal home loan bank shall submit for Finance Board approval a plan establishing and implementing a capital structure for such bank that— “(A) the board of directors determines is best suited for the condition and operation of the bank and the interests of the members of the bank; “(B) meets the requirements of subsection (c); and “(C) meets the minimum capital standards and requirements established under subsection (a) and other regulations prescribed by the Finance Board. “(2) Approval of modifications.— The board of directors of a Federal home loan bank shall submit to the Finance Board for approval any modifications that the bank proposes to make to an approved capital structure plan. “(c) Contents of Plan.— The capital structure plan of each Federal home loan bank shall contain provisions addressing each of the following: “(1) Minimum investment.— “(A) In general.— Each capital structure plan of a Federal home loan bank shall require each member of the bank to maintain a minimum investment in the stock of the bank, the amount of which shall be determined in a manner to be prescribed by the board of directors of each bank and to be included as part of the plan. “(B) Investment alternatives.— “(i) In general.— In establishing the minimum investment required for each member under subparagraph (A), a Federal home loan bank may, in its discretion, include any 1 or more of the requirements referred to in clause (ii), or any other provisions approved by the Finance Board. “(ii) Authorized requirements.— A requirement is referred to in this clause if it is a requirement for— “(I) a stock purchase based on a percentage of the total assets of a member; or “(II) a stock purchase based on a percentage of the outstanding advances from the bank to the member. “(C) Minimum amount.— Each capital structure plan of a Federal home loan bank shall require that the minimum stock investment established for members shall be set at a level that is sufficient for the bank to meet the minimum capital requirements established by the Finance Board under subsection (a). “(D) Adjustments to minimum required investment.— The capital structure plan of each Federal home loan bank shall impose a continuing obligation on the board of directors of the bank to review and adjust the minimum investment required of each member of that bank, as necessary to ensure that the bank remains in compliance with applicable minimum capital levels established by the Finance Board, and shall require each member to comply promptly with any adjustments to the required minimum investment. “(2) Transition rule.— “(A) In general.— The capital structure plan of each Federal home loan bank shall specify the date on which it shall take effect, and may provide for a transition period of not longer than 3 years to allow the bank to come into compliance with the capital requirements prescribed under subsection (a), and to allow any institution that was a member of the bank on the date of the enactment of the Federal Home Loan Bank System Modernization Act of 1999, to come into compliance with the minimum investment required pursuant to the plan. “(B) Interim purchase requirements.— The capital structure plan of a Federal home loan bank may allow any member referred to in subparagraph (A) that would be required by the terms of the capital structure plan to increase its investment in the stock of the bank to do so in periodic installments during the transition period. “(3) Disposition of shares.— The capital structure plan of a Federal home loan bank shall provide for the manner of disposition of any stock held by a member of that bank that terminates its membership or that provides notice of its intention to withdraw from membership in that bank. “(4) Classes of stock.— “(A) In general.— The capital structure plan of a Federal home loan bank shall afford each member of that bank the option of maintaining its required investment in the bank through the purchase of any combination of classes of stock authorized by the board of directors of the bank and approved by the Finance Board in accordance with its regulations. “(B) Rights requirement.— A Federal home loan bank shall include in its capital structure plan provisions establishing terms, rights, and preferences, including minimum investment, dividends, voting, and liquidation preferences of each class of stock issued by the bank, consistent with Finance Board regulations and market requirements. “(C) Reduced minimum investment.— The capital structure plan of a Federal home loan bank may provide for a reduced minimum stock investment for any member of that bank that elects to purchase Class B in a manner that is consistent with meeting the minimum capital requirements of the bank, as established by the Finance Board. “(D) Liquidation of claims.— The capital structure plan of a Federal home loan bank shall provide for the liquidation in an orderly manner, as determined by the bank, of any claim of that bank against a member, including claims for any applicable prepayment fees or penalties resulting from prepayment of advances prior to stated maturity. “(5) Limited transferability of stock.— The capital structure plan of a Federal home loan bank shall— “(A) provide that any stock issued by that bank shall be available only to and held only by members of that bank and tradable only between that bank and its members; and “(B) establish standards, criteria, and requirements for the issuance, purchase, transfer, retirement, and redemption of stock issued by that bank. “(6) Bank review of plan.— Before filing a capital structure plan with the Finance Board, each Federal home loan bank shall conduct a review of the plan by— “(A) an independent certified public accountant, to ensure, to the extent possible, that implementation of the plan would not result in any write-down of the redeemable bank stock investment of its members; and “(B) at least one major credit rating agency, to determine, to the extent possible, whether implementation of the plan would have any material effect on the credit ratings of the bank. “(d) Termination of membership.— “(1) Voluntary withdrawal.— Any member may withdraw from a Federal home loan bank if the member provides written notice to the bank of its intent to do so and if, on the date of withdrawal, there is in effect a certification by the Finance Board that the withdrawal will not cause the Federal Home Loan Bank System to fail to meet its obligation under section 21B(f)(2)(C) to contribute to the debt service for the obligations issued by the Resolution Funding Corporation. The applicable stock redemption notice periods shall commence upon receipt of the notice by the bank. Upon the expiration of the applicable notice period for each class of redeemable stock, the member may surrender such stock to the bank, and shall be entitled to receive in cash the par value of the stock. During the applicable notice periods, the member shall be entitled to dividends and other membership rights commensurate with continuing stock ownership. “(2) Involuntary withdrawal.— “(A) In general.— The board of directors of a Federal home loan bank may terminate the membership of any institution if, subject to Finance Board regulations, it determines that— “(i) the member has failed to comply with a provision of this Act or any regulation prescribed under this Act; or “(ii) the member has been determined to be insolvent, or otherwise subject to the appointment of a conservator, receiver, or other legal custodian, by a Federal or State authority with regulatory and supervisory responsibility for the member. “(B) Stock disposition.— An institution, the membership of which is terminated in accordance with subparagraph (A)— “(i) shall surrender redeemable stock to the Federal home loan bank, and shall receive in cash the par value of the stock, upon the expiration of the applicable notice period under subsection (a)(4)(A); “(ii) shall receive any dividends declared on its redeemable stock, during the applicable notice period under subsection (a)(4)(A); and “(iii) shall not be entitled to any other rights or privileges accorded to members after the date of the termination. “(C) Commencement of notice period.— With respect to an institution, the membership of which is terminated in accordance with subparagraph (A), the applicable notice period under subsection (a)(4) for each class of redeemable stock shall commence on the earlier of— “(i) the date of such termination; or “(ii) the date on which the member has provided notice of its intent to redeem such stock. “(3) Liquidation of indebtedness.— Upon the termination of the membership of an institution for any reason, the outstanding indebtedness of the member to the bank shall be liquidated in an orderly manner, as determined by the bank and, upon the extinguishment of all such indebtedness, the bank shall return to the member all collateral pledged to secure the indebtedness. “(e) Redemption of Excess Stock.— “(1) In general.— A Federal home loan bank, in its sole discretion, may redeem or repurchase, as appropriate, any shares of Class A or Class B stock issued by the bank and held by a member that are in excess of the minimum stock investment required of that member. “(2) Excess stock.— Shares of stock held by a member shall not be deemed to be ‘excess stock’ for purposes of this subsection by virtue of a member’s submission of a notice of intent to withdraw from membership or termination of its membership in any other manner. “(3) Priority.— A Federal home loan bank may not redeem any excess Class B stock prior to the end of the 5-year notice period, unless the member has no Class A stock outstanding that could be redeemed as excess. “(f) Impairment of Capital.— If the Finance Board or the board of directors of a Federal home loan bank determines that the bank has incurred or is likely to incur losses that result in or are expected to result in charges against the capital of the bank, the bank shall not redeem or repurchase any stock of the bank without the prior approval of the Finance Board while such charges are continuing or are expected to continue. In no case may a bank redeem or repurchase any applicable capital stock if, following the redemption, the bank would fail to satisfy any minimum capital requirement. “(g) Rejoining After Divestiture of All Shares.— “(1) In general.— Except as provided in paragraph (2), and notwithstanding any other provision of this Act, an institution that divests all shares of stock in a Federal home loan bank may not, after such divestiture, acquire shares of any Federal home loan bank before the end of the 5-year period beginning on the date of the completion of such divestiture, unless the divestiture is a consequence of a transfer of membership on an uninterrupted basis between banks. “(2) Exception for withdrawals from membership before 1998.— Any institution that withdrew from membership in any Federal home loan bank before December 31, 1997, may acquire shares of a Federal home loan bank at any time after that date, subject to the approval of the Finance Board and the requirements of this Act. “(h) Treatment of Retained Earnings.— “(1) In general.— The holders of the Class B stock of a Federal home loan bank shall own the retained earnings, surplus, undivided profits, and equity reserves, if any, of the bank. “(2) Exception.— Except as specifically provided in this section or through the declaration of a dividend or a capital distribution by a Federal home loan bank, or in the event of liquidation of the bank, a member shall have no right to withdraw or otherwise receive distribution of any portion of the retained earnings of the bank. “(3) Limitation.— A Federal home loan bank may not make any distribution of its retained earnings unless, following such distribution, the bank would continue to meet all applicable capital requirements.”.

28. 2000

    Financial Regulatory Relief and Economic Efficiency Act of 2000

    Pub. L. 106–569 title XII § 1224 · 114 Stat. 2944

    Substituted · 12 U.S.C. § 1426(a)(1)

    Pub. L. 106–569 substituted “18 months” for “1 year” in introductory provisions

    Source evidence

    Code amendment note
    Subsec. (a)(1). Pub. L. 106–569 substituted “18 months” for “1 year” in introductory provisions.

    Enacted provision · exact public law section
    SEC. 1224. EXTENSION OF TIME. Section 6(a)(1) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(1)) is amended by striking “1 year” and inserting “18 months”.

29. 2008

    Federal Housing Finance Regulatory Reform Act of 2008

    Pub. L. 110–289 § 1204(10) · 122 Stat. 2654

    Substituted · 12 U.S.C. § 1426

    Pub. L. 110–289, § 1204(10), substituted “the Director” for “the Finance Board” wherever appearing in subsecs. (a)(1), (3)(B), (4) to (6), (b)(1)(C), (2), (c)(1), (4)(A), (C), (6), (d)(1), (f), and (g)

    Source evidence

    Code amendment note
    Pub. L. 110–289, § 1204(10), substituted “the Director” for “the Finance Board” wherever appearing in subsecs. (a)(1), (3)(B), (4) to (6), (b)(1)(C), (2), (c)(1), (4)(A), (C), (6), (d)(1), (f), and (g).

    Enacted provision · exact public law section
    (10) by 12 USC 1422 et al. striking “the Finance Board” each place that term appears and inserting “the Director”;

30. 2008

    Federal Housing Finance Regulatory Reform Act of 2008

    Pub. L. 110–289 § 1110(b)(1) · 122 Stat. 2654

    1. Added · 12 U.S.C. § 1426(a)(3)(A)

       Pub. L. 110–289, § 1110(b)(1), added subpar. (A)

    2. Struck · 12 U.S.C. § 1426(a)(3)(A)

       Pub. L. 110–289, § 1110(b)(1), struck out former subpar. (A). Prior to amendment, text read as follows: “Each Federal home loan bank shall maintain permanent capital in an amount that is sufficient, as determined in accordance with the regulations of the Finance Board, to meet—

    Source evidence

    Code amendment note
    Subsec. (a)(3)(A). Pub. L. 110–289, § 1110(b)(1), added subpar. (A) and struck out former subpar. (A). Prior to amendment, text read as follows: “Each Federal home loan bank shall maintain permanent capital in an amount that is sufficient, as determined in accordance with the regulations of the Finance Board, to meet—

    “(i) the credit risk to which the Federal home loan bank is subject; and “(ii) the market risk, including interest rate risk, to which the Federal home loan bank is subject, based on a stress test established by the Finance Board that rigorously tests for changes in market variables, including changes in interest rates, rate volatility, and changes in the shape of the yield curve.”

    Enacted provision · exact public law section
    (1) by striking subparagraph (A) and inserting the following: “(A) Risk-based capital standards.— The Regulations. 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

31. 2008

    Federal Housing Finance Regulatory Reform Act of 2008

    Pub. L. 110–289 § 1110(b)(2) · 122 Stat. 2654

    Substituted · 12 U.S.C. § 1426(a)(3)(B)

    Pub. L. 110–289, § 1110(b)(2), substituted “(A)” for “(A)(ii)”

    Source evidence

    Code amendment note
    Subsec. (a)(3)(B). Pub. L. 110–289, § 1110(b)(2), substituted “(A)” for “(A)(ii)”.

    Enacted provision · exact public law section
    (2) in subparagraph (B), by striking “(A)(ii)” and inserting “(A)”.

32. 2008

    Federal Housing Finance Regulatory Reform Act of 2008

    Pub. L. 110–289 § 1204(4)(A) · 122 Stat. 2654

    1. Substituted · 12 U.S.C. § 1426(b)(1)

       Pub. L. 110–289, § 1204(4)(A), (10), substituted “the Director” for “the Finance Board” in introductory provisions

    2. Substituted · 12 U.S.C. § 1426(b)(1)

       Pub. L. 110–289, § 1204(4)(A), (10), substituted “approval by the Director” for “Finance Board approval” in introductory provisions

    Source evidence

    Code amendment note
    Subsec. (b)(1). Pub. L. 110–289, § 1204(4)(A), (10), substituted “the Director” for “the Finance Board” and “approval by the Director” for “Finance Board approval” in introductory provisions.

    Enacted provision · exact public law section
    (A) in subsection (b)(1), in the matter preceding subparagraph (A), by striking “Finance Board approval” and inserting “approval by the Director”; and

33. 2008

    Federal Housing Finance Regulatory Reform Act of 2008

    Pub. L. 110–289 § 1204(4)(B) · 122 Stat. 2654

    Substituted · 12 U.S.C. § 1426(c)(4)(B); 12 U.S.C. § 1426(d)(2)(A)

    Pub. L. 110–289, § 1204(4)(B), substituted “regulations of the Director” for “Finance Board regulations”

    Source evidence

    Code amendment note
    Subsecs. (c)(4)(B), (d)(2)(A). Pub. L. 110–289, § 1204(4)(B), substituted “regulations of the Director” for “Finance Board regulations”.

    Enacted provision · exact public law section
    (B) in each of subsections (c)(4)(B) and (d)(2), by striking “Finance Board regulations” each place that term appears and inserting “regulations of the Director”;

30 of 46 references resolved to an enrolled provision · 11 partial · 5 unresolved