Housing and Economic Recovery Act of 2008/Division A/Title I/Subtitle A

by United States Congress

SUBTITLE A — IMPROVEMENT OF SAFETY AND SOUNDNESS SUPERVISION

Sec. 1101. Establishment of the Federal Housing Finance Agency.

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by striking sections 1311 and 1312 and inserting the following:

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

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

``(b) General Supervisory and Regulatory Authority.—

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

``(2) Authority over fannie mae, freddie mac, the federal home loan banks, and the office of finance.—The Director shall have general regulatory authority over each regulated entity and the Office of Finance, and shall exercise such general regulatory authority, including such duties and authorities set forth under section 1313, to ensure that the purposes of this Act, the authorizing statutes, and any other applicable law are carried out.

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

``SEC. 1312. DIRECTOR.

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

``(b) Appointment; Term.—

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

``(2) Term.—The Director shall be appointed for a term of 5 years, unless removed before the end of such term for cause by the President.

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

``(4) Service after end of term.—An individual may serve as the Director after the expiration of the term for which appointed until a successor has been appointed.

``(5) Transitional Provision.—Notwithstanding paragraphs (1) and (2), during the period beginning on the effective date of the Federal Housing Finance Regulatory Reform Act of 2008, and ending on the date on which the Director is appointed and confirmed, the person serving as the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development on that effective date shall act for all purposes as, and with the full powers of, the Director.

``(c) Deputy Director of the Division of Enterprise Regulation.—

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

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

``(d) Deputy Director Of The Division Of Federal Home Loan Bank Regulation.—

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

``(2) Functions.—The Deputy Director of the Division of Federal Home Loan Bank Regulation shall have such functions, powers, and duties with respect to the oversight of the Federal Home Loan Banks as the Director shall prescribe.

``(e) Deputy Director for Housing Mission and Goals.—

``(1) In general.—The Agency shall have a Deputy Director for Housing Mission and Goals, who shall be designated by the Director from among individuals who are citizens of the United States, and have a demonstrated understanding of the housing markets and housing finance.

``(2) Functions.—The Deputy Director for Housing Mission and Goals shall have such functions, powers, and duties with respect to the oversight of the housing mission and goals of the enterprises, and with respect to oversight of the housing finance and community and economic development mission of the Federal Home Loan Banks, as the Director shall prescribe.

``(3) Considerations.—In exercising such functions, powers, and duties, the Deputy Director for Housing Mission and Goals shall consider the differences between the enterprises and the Federal Home Loan Banks, including those described in section 1313(d).

``(f) Acting Director.—In the event of the death, resignation, sickness, or absence of the Director, the President shall designate either the Deputy Director of the Division of Enterprise Regulation, the Deputy Director of the Division of Federal Home Loan Bank Regulation, or the Deputy Director for Housing Mission and Goals, to serve as acting Director until the return of the Director, or the appointment of a successor pursuant to subsection (b).

``(g) Limitations.—The Director and each of the Deputy Directors may not—

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

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

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

Sec. 1102. Duties and Authorities of the Director.

(a) In General.—

Section 1313 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513) is amended to read as follows:

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

``(a) Duties.—

``(1) Principal duties.—The principal duties of the Director shall be—

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

``(B) to ensure that—

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

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

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

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

``(v) the activities of each regulated entity and the manner in which such regulated entity is operated are consistent with the public interest.

``(2) Scope of authority.—The authority of the Director shall include the authority—

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

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

``(b) Delegation of Authority.—The Director may delegate to officers and employees of the Agency any of the functions, powers, or duties of the Director, as the Director considers appropriate.

``(c) Litigation Authority.—

``(1) In general.—In enforcing any provision of this title, any regulation or order prescribed under this title, or any other provision of law, rule, regulation, or order, or in any other action, suit, or proceeding to which the Director is a party or in which the Director is interested, and in the administration of conservatorships and receiverships, the Director may act in the Director's own name and through the Director's own attorneys.

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

(b) Independence in Congressional Testimony and Recommendations.—

Section 111 of Public Law 93-495 (12 U.S.C. 250) is amended by striking "the Federal Housing Finance Board" and inserting "the Director of the Federal Housing Finance Agency".

Sec. 1103. Federal Housing Finance Oversight Board.

(a) In General.—

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting after section 1313 the following:

``SEC. 1313A. FEDERAL HOUSING FINANCE OVERSIGHT BOARD.

``(a) In General.—There is established the Federal Housing Finance Oversight Board, which shall advise the Director with respect to overall strategies and policies in carrying out the duties of the Director under this title.

``(b) Limitations.—The Board may not exercise any executive authority, and the Director may not delegate to the Board any of the functions, powers, or duties of the Director.

``(c) Composition.—The Board shall be comprised of 4 members, of whom—

``(1) 1 member shall be the Secretary of the Treasury;

``(2) 1 member shall be the Secretary of Housing and Urban Development;

``(3) 1 member shall be the Chairman of the Securities and Exchange Commission; and

``(4) 1 member shall be the Director, who shall serve as the Chairperson of the Board.

``(d) Meetings.—

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

``(2) Special meetings.—Either the Secretary of the Treasury, the Secretary of Housing and Urban Development, or the Chairman of the Securities and Exchange Commission may, upon giving written notice to the Director, require a special meeting of the Board.

``(e) Testimony.—On an annual basis, the Board shall testify before Congress regarding—

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

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

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

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

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

``(6) such other matters relating to the Agency and its fulfillment of its mission, as the Board determines appropriate.´´.

(b) Annual Report of the Director.—

Section 1319B(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4521(a)) is amended—

(1) by striking "enterprise" each place that term appears and inserting "regulated entity";

(2) by striking "enterprises" each place that term appears and inserting "regulated entities";

(3) in paragraph (3), by striking "; and" and inserting a semicolon;

(4) in paragraph (4), by striking "1994." and inserting "1994; and"; and

(5) by adding at the end the following:

``(5) the assessment of the Board or any of its members with respect to—

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

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

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

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

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

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

Sec. 1104. Authority to Require Reports by Regulated Entities.

(a) In General.—

Section 1314 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4514) is amended—

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

(2) by striking "an enterprise" each place that term appears and inserting "a regulated entity";

(3) by striking "the enterprise" and inserting "the regulated entity";

(4) in subsection (a)—

(A) by striking the subsection heading and all that follows through "and operations" in paragraph (1) and inserting the following:

``(a) Regular and Special Reports.—

``(1) Regular reports.—The Director may require, by general or specific orders, a regulated entity to submit regular reports, including financial statements determined on a fair value basis, on the condition (including financial condition), management, activities, or operations of the regulated entity, as the Director considers appropriate"; and

(B) in paragraph (2)—

(i) by inserting ", by general or specific orders," after "may also require"; and

(ii) by striking "whenever" and inserting "on any of the topics specified in paragraph (1) or any other relevant topics, if"; and

(5) by adding at the end the following:

``(c) Penalties for Failure To Make Reports.—

``(1) Violations.—It shall be a violation of this section for any regulated entity—

``(A) to fail to make, transmit, or publish any report or obtain any information required by the Director under this section, section 309(k) of the Federal National Mortgage Association Charter Act, section 307(c) of the Federal Home Loan Mortgage Corporation Act, or section 20 of the Federal Home Loan Bank Act, within the period of time specified in such provision of law or otherwise by the Director; or

``(B) to submit or publish any false or misleading report or information under this section.

``(2) Penalties.—

``(A) First tier.—

``(i) In general.—A violation described in paragraph (1) shall be subject to a penalty of not more than $2,000 for each day during which such violation continues, in any case in which—

``(I) the subject regulated entity maintains procedures reasonably adapted to avoid any inadvertent error and the violation was unintentional and a result of such an error; or

``(II) the violation was an inadvertent transmittal or publication of any report which was minimally late.

``(ii) Burden of proof.—For purposes of this subparagraph, the regulated entity shall have the burden of proving that the error was inadvertent or that a report was inadvertently transmitted or published late.

``(B) Second tier.—A violation described in paragraph (1) shall be subject to a penalty of not more than $20,000 for each day during which such violation continues or such false or misleading information is not corrected, in any case that is not addressed in subparagraph (A) or (C).

``(C) Third tier.—A violation described in paragraph (1) shall be subject to a penalty of not more than $1,000,000 per day for each day during which such violation continues or such false or misleading information is not corrected, in any case in which the subject regulated entity committed such violation knowingly or with reckless disregard for the accuracy of any such information or report.

``(3) Assessments.—Any penalty imposed under this subsection shall be in lieu of a penalty under section 1376, but shall be assessed and collected by the Director in the manner provided in section 1376 for penalties imposed under that section, and any such assessment (including the determination of the amount of the penalty) shall be otherwise subject to the provisions of section 1376.

``(4) Hearing.—A regulated entity against which a penalty is assessed under this section shall be afforded an agency hearing if the regulated entity submits a request for a hearing not later than 20 days after the date of the issuance of the notice of assessment. Section 1374 shall apply to any such proceedings.´´.

(b) Conforming Amendment.—

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by striking sections 1327 and 1328.

Sec. 1105. Examiners and Accountants; Authority to Contract for Reviews of Regulated Entities; Ombudsman.

(a) In General.—

Section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517) is amended—

(1) in subsection (a), by striking "enterprise" each place that term appears and inserting "regulated entity";

(2) in subsection (b)—

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

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

(3) in subsection (c), in the second sentence, by inserting before the period "to conduct examinations under this section";

(4) by redesignating subsections (d) through (f) as subsections (e) through (g), respectively; and

(5) by inserting after subsection (c) the following:

``(d) Inspector General.—There shall be within the Agency an Inspector General, who shall be appointed in accordance with section 3(a) of the Inspector General Act of 1978.´´.

(b) Direct Hire Authority To Hire Accountants, Economists, and Examiners.—

Section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517) is amended by adding at the end the following:

``(h) Appointment of Accountants, Economists, and Examiners.—

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

``(2) Appointment authority.—The Director may appoint candidates to any position described in paragraph (1)—

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

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

(c) Amendments to Inspector General Act.—

Section 11 of the Inspector General Act of 1978 (5 U.S.C. App.) is amended—

(1) in paragraph (1), by inserting "; the Director of the Federal Housing Finance Agency" after "Social Security Administration"; and

(2) in paragraph (2), by inserting ", the Federal Housing Finance Agency" after "Social Security Administration".

(d) Authority To Contract for Reviews of Regulated Entities.—

Section 1319 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4519) is amended—

(1) in the section heading, by striking "enterprises by rating organization" and inserting "regulated entities"; and

(2) by striking "enterprises" and inserting "regulated entities".

(e) Office of the Ombudsman.—

Section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517) is amended by adding at the end the following:

``(i) Ombudsman.—The Director shall establish, by regulation, an Office of the Ombudsman within the Agency, which shall be responsible for considering complaints and appeals, from any regulated entity and any person that has a business relationship with a regulated entity, regarding any matter relating to the regulation and supervision of such regulated entity by the Agency. The regulation issued by the Director under this subsection shall specify the authority and duties of the Office of the Ombudsman.´´.

Sec. 1106. Assessments.

Section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4516) is amended—

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

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

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

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

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

``(4) the windup of the affairs of the Office of Federal Housing Enterprise Oversight and the Federal Housing Finance Board under title III of the Federal Housing Finance Regulatory Reform Act of 2008.´´;

(2) in subsection (b)—

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

(B) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively; and

(C) by inserting after paragraph (1) the following:

``(2) Separate treatment of federal home loan bank and enterprise assessments.—Assessments collected from the enterprises shall not exceed the amounts sufficient to provide for the costs and expenses described in subsection (a) relating to the enterprises. Assessments collected from the Federal Home Loan Banks shall not exceed the amounts sufficient to provide for the costs and expenses described in subsection (a) relating to the Federal Home Loan Banks.´´;

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

``(c) Increased Costs of Regulation.—

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

``(2) Adjustment for enforcement activities.—The Director may adjust the amounts of any semiannual payments for an assessment under subsection (a) that are to be paid pursuant to subsection (b) by a regulated entity, as necessary in the discretion of the Director, to ensure that the costs of enforcement activities under this Act for a regulated entity are borne only by such regulated entity.

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

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

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

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

``(f) Treatment of Assessments.—

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

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

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

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

``(5) Availability of oversight fund amounts.— Notwithstanding any other provision of law, any amounts remaining in the Federal Housing Enterprises Oversight Fund established under this section (as in effect before the effective date of the Federal Housing Finance Regulatory Reform Act of 2008, and any amounts remaining from assessments on the Federal Home Loan Banks pursuant to section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 1438(b)), shall, upon such effective date, be treated for purposes of this subsection as amounts received from assessments under this section.

``(6) Treasury investments.—

``(A) Authority.—The Director may request the Secretary of the Treasury to invest such portions of amounts received by the Director from assessments paid under this section that, in the Director's discretion, are not required to meet the current working needs of the Agency.

``(B) Government obligations.—Pursuant to a request under subparagraph (A), the Secretary of the Treasury shall invest such amounts in Government obligations guaranteed as to principal and interest by the United States with maturities suitable to the needs of the Agency and bearing interest at a rate determined by the Secretary of the Treasury taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturity.

``(g) Budget and Financial Management.—

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

``(2) Financial statements.—The Agency shall prepare annually a statement of—

``(A) assets and liabilities and surplus or deficit;

``(B) income and expenses; and

``(C) sources and application of funds.

``(3) Financial management systems.—The Agency shall implement and maintain financial management systems that—

``(A) comply substantially with Federal financial management systems requirements and applicable Federal accounting standards; and

``(B) use a general ledger system that accounts for activity at the transaction level.

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

``(5) Rule of construction.—This subsection may not be construed as implying any obligation on the part of the Director to consult with or obtain the consent or approval of the Director of the Office of Management and Budget with respect to any report, plan, forecast, or other information referred to in paragraph (1) or any jurisdiction or oversight over the affairs or operations of the Agency.

``(h) Audit of Agency.—

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

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

``(3) Assistance and costs.—For the purpose of conducting an audit under this subsection, the Comptroller General may, in the discretion of the Comptroller General, employ by contract, without regard to section 3709 of the Revised Statutes of the United States (41 U.S.C. 5), professional services of firms and organizations of certified public accountants for temporary periods or for special purposes. Upon the request of the Comptroller General, the Director of the Agency shall transfer to the Government Accountability Office from funds available, the amount requested by the Comptroller General to cover the full costs of any audit and report conducted by the Comptroller General. The Comptroller General shall credit funds transferred to the account established for salaries and expenses of the Government Accountability Office, and such amount shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report.´´.

Sec. 1107. Regulations and Orders.

Section 1319G of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4526) is amended—

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

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

(2) by striking subsection (c).

Sec. 1108. Prudential Management and Operations Standards.

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting after section 1313A, as added by this Act, the following new section:

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

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

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

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

``(3) management of interest rate risk exposure;

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

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

``(6) management of asset and investment portfolio growth;

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

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

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

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

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

``(b) Failure To Meet Standards.—

``(1) Plan requirement.—

``(A) In general.—If the Director determines that a regulated entity fails to meet any standard established under subsection (a)—

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

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

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

``(C) Deadlines for submission and review.—

``The Director shall by regulation establish deadlines that—

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

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

``(2) Required order upon failure to submit or implement plan.—If a regulated entity fails to submit an acceptable plan within the time allowed under paragraph (1)(C), or fails in any material respect to implement a plan accepted by the Director, the following shall apply:

``(A) Required correction of deficiency.—The Director shall, by order, require the regulated entity to correct the deficiency.

``(B) Other authority.—The Director may, by order, take one or more of the following actions until the deficiency is corrected:

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

``(ii) Require the regulated entity—

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

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

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

``(3) Mandatory restrictions.—In complying with paragraph (2), the Director shall take one or more of the actions described in clauses (i) through (iii) of paragraph (2)(B) if—

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

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

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

``(c) Other Enforcement Authority Not Affected.—The authority of the Director under this section is in addition to any other authority of the Director.´´.

Sec. 1109. Review of and Authority Over Enterprise Assets and Liabilities.

(a) In General.—

Subtitle B of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611 et seq.) is amended—

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

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

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

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

``(a) In General.—The Director shall, by regulation, establish criteria governing the portfolio holdings of the enterprises, to ensure that the holdings are backed by sufficient capital and consistent with the mission and the safe and sound operations of the enterprises. In establishing such criteria, the Director shall consider the ability of the enterprises to provide a liquid secondary market through securitization activities, the portfolio holdings in relation to the overall mortgage market, and adherence to the standards specified in section 1313B.

``(b) Temporary Adjustments.—The Director may, by order, make temporary adjustments to the established standards for an enterprise or both enterprises, such as during times of economic distress or market disruption.

``(c) Authority To Require Disposition or Acquisition.—The Director shall monitor the portfolio of each enterprise. Pursuant to subsection (a) and notwithstanding the capital classifications of the enterprises, the Director may, by order, require an enterprise, under such terms and conditions as the Director determines to be appropriate, to dispose of or acquire any asset, if the Director determines that such action is consistent with the purposes of this Act or any of the authorizing statutes.´´.

(b) Regulations.—

Not later than the expiration of the 180-day period beginning on the effective date of this Act, the Director shall issue regulations pursuant to section 1369E(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (as added by subsection (a) of this section) establishing the portfolio holdings standards under such section.

Sec. 1110. Risk-Based Capital Requirements.

(a) In General.—

Section 1361 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611) is amended to read as follows:

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

``(a) In General.—

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

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

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

(b) Federal Home Loan Banks Risk-Based Capital.—

Section 6(a)(3) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(3)) is amended—

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

``(A) Risk-based capital standards.—

``The Director shall, by regulation, establish risk-based capital standards for the Federal Home Loan Banks to ensure that the Federal Home Loan Banks operate in a safe and sound manner, with sufficient permanent capital and reserves to support the risks that arise in the operations and management of the Federal Home Loans Banks.´´; and

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

Sec. 1111. Minimum Capital Levels.

Section 1362 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4612) is amended—

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

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

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

``(c) Establishment of Revised Minimum Capital Levels.—

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

``(d) Authority To Require Temporary Increase.—

``(1) In general.—Notwithstanding subsections (a) and (b) and any minimum capital level established pursuant to subsection (c), the Director may, by order, increase the minimum capital level for a regulated entity on a temporary basis, when the Director determines that such an increase is necessary and consistent with the prudential regulation and the safe and sound operations of a regulated entity.

``(2) Rescission.—The Director shall rescind any temporary minimum capital level established under paragraph (1) when the Director determines that the circumstances or facts no longer justify the temporary minimum capital level.

``(3) Regulations required.—The Director shall issue regulations establishing—

``(A) standards for the imposition of a temporary increase in minimum capital under paragraph (1);

``(B) the standards and procedures that the Director will use to make the determination referred to in paragraph (2); and

``(C) a reasonable time frame for periodic review of any temporary increase in minimum capital for the purpose of making the determination referred to in paragraph (2).

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

``(f) Periodic Review.—The Director shall periodically review the amount of core capital maintained by the enterprises, the amount of capital retained by the Federal Home Loan Banks, and the minimum capital levels established for such regulated entities pursuant to this section.´´.

Sec. 1112. Registration Under the Securities Laws.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding at the end the following:

``SEC. 38. FEDERAL NATIONAL MORTGAGE ASSOCIATION, FEDERAL HOME LOAN MORTGAGE CORPORATION, FEDERAL HOME LOAN BANKS.

``(a) Federal National Mortgage Association and Federal Home Loan Mortgage Corporation.—No class of equity securities of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation shall be treated as an exempted security for purposes of section 12, 13, 14, or 16.

``(b) Federal Home Loan Banks.—

``(1) Registration.—Each Federal Home Loan Bank shall register a class of its common stock under section 12(g), not later than 120 days after the date of enactment of the Federal Housing Finance Regulatory Reform Act of 2008, and shall thereafter maintain such registration and be treated for purposes of this title as an 'issuer', the securities of which are required to be registered under section 12, regardless of the number of members holding such stock at any given time.

``(2) Standards relating to audit committees.—Each Federal Home Loan Bank shall comply with the rules issued by the Commission under section 10A(m).

``(c) Definitions.—For purposes of this section, the following definitions shall apply:

``(1) Federal home loan bank; member.—The terms 'Federal Home Loan Bank' and 'member', have the same meanings as in section 2 of the Federal Home Loan Bank Act.

``(2) Federal national mortgage association.—The term 'Federal National Mortgage Association' means the corporation created by the Federal National Mortgage Association Charter Act.

``(3) Federal home loan mortgage corporation.—The term 'Federal Home Loan Mortgage Corporation' means the corporation created by the Federal Home Loan Mortgage Corporation Act.´´.

Sec. 1113. Prohibition and Withholding of Executive Compensation.

(a) In General.—

Section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518) is amended—

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

(2) in subsection (a)—

(A) by striking "enterprise" and inserting "regulated entity"; and

(B) by striking "enterprises" and inserting "regulated entities";

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

(4) by inserting after subsection (a) the following:

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

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

(b) Conforming Amendments.—

(1) Fannie Mae.—

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

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

(2) Freddie Mac.—

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

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

(3) Federal Home Loan Banks.—

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

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

Sec. 1114. Limit on Golden Parachutes.

Section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518) is amended by adding at the end the following:

``(e) Authority To Regulate or Prohibit Certain Forms of Benefits to Affiliated Parties.—

``(1) Golden parachutes and indemnification payments.—The Director may prohibit or limit, by regulation or order, any golden parachute payment or indemnification payment.

``(2) Factors to be taken into account.—

``The Director shall prescribe, by regulation, the factors to be considered by the Director in taking any action pursuant to paragraph (1), which may include such factors as—

``(A) whether there is a reasonable basis to believe that the affiliated party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the regulated entity that has had a material effect on the financial condition of the regulated entity;

``(B) whether there is a reasonable basis to believe that the affiliated party is substantially responsible for the insolvency of the regulated entity, the appointment of a conservator or receiver for the regulated entity, or the troubled condition of the regulated entity (as defined in regulations prescribed by the Director);

``(C) whether there is a reasonable basis to believe that the affiliated party has materially violated any applicable provision of Federal or State law or regulation that has had a material effect on the financial condition of the regulated entity;

``(D) whether the affiliated party was in a position of managerial or fiduciary responsibility; and

``(E) the length of time that the party was affiliated with the regulated entity, and the degree to which—

``(i) the payment reasonably reflects compensation earned over the period of employment; and

``(ii) the compensation involved represents a reasonable payment for services rendered.

``(3) Certain payments prohibited.—No regulated entity may prepay the salary or any liability or legal expense of any affiliated party if such payment is made—

``(A) in contemplation of the insolvency of such regulated entity, or after the commission of an act of insolvency; and

``(B) with a view to, or having the result of—

``(i) preventing the proper application of the assets of the regulated entity to creditors; or

``(ii) preferring one creditor over another.

``(4) Golden parachute payment defined.—

``(A) In general.—For purposes of this subsection, the term 'golden parachute payment' means any payment (or

``any agreement to make any payment) in the nature of compensation by any regulated entity for the benefit of any affiliated party pursuant to an obligation of such regulated entity that—

``(i) is contingent on the termination of such party's affiliation with the regulated entity; and

``(ii) is received on or after the date on which—

``(I) the regulated entity became insolvent;

``(II) any conservator or receiver is appointed for such regulated entity; or

``(III) the Director determines that the regulated entity is in a troubled condition (as defined in the regulations of the Director).

``(B) Certain payments in contemplation of an event.—Any payment which would be a golden parachute payment but for the fact that such payment was made before the date referred to in subparagraph (A)(ii) shall be treated as a golden parachute payment if the payment was made in contemplation of the occurrence of an event described in any subclause of such subparagraph.

``(C) Certain payments not included.—For purposes of this subsection, the term 'golden parachute payment' shall not include—

``(i) any payment made pursuant to a retirement plan which is qualified (or is intended to be qualified) under section 401 of the Internal Revenue Code of 1986, or other nondiscriminatory benefit plan;

``(ii) any payment made pursuant to a bona fide deferred compensation plan or arrangement which the Director determines, by regulation or order, to be permissible; or

``(iii) any payment made by reason of the death or disability of an affiliated party.

``(5) Other definitions.—For purposes of this subsection, the following definitions shall apply:

``(A) Indemnification payment.—Subject to paragraph (6), the term 'indemnification payment' means any payment (or any agreement to make any payment) by any regulated entity for the benefit of any person who is or was an affiliated party, to pay or reimburse such person for any liability or legal expense with regard to any administrative proceeding or civil action instituted by the Agency which results in a final order under which such person—

``(i) is assessed a civil money penalty;

``(ii) is removed or prohibited from participating in conduct of the affairs of the regulated entity; or

``(iii) is required to take any affirmative action to correct certain conditions resulting from violations or practices, by order of the Director.

``(B) Liability or legal expense.—The term 'liability or legal expense' means—

``(i) any legal or other professional expense incurred in connection with any claim, proceeding, or action;

``(ii) the amount of, and any cost incurred in connection with, any settlement of any claim, proceeding, or action; and

``(iii) the amount of, and any cost incurred in connection with, any judgment or penalty imposed with respect to any claim, proceeding, or action.

``(C) Payment.—The term 'payment' includes—

``(i) any direct or indirect transfer of any funds or any asset; and

``(ii) any segregation of any funds or assets for the purpose of making, or pursuant to an agreement to make, any payment after the date on which such funds or assets are segregated, without regard to whether the obligation to make such payment is contingent on—

``(I) the determination, after such date, of the liability for the payment of such amount; or

``(II) the liquidation, after such date, of the amount of such payment.

``(6) Certain commercial insurance coverage not treated as covered benefit payment.—No provision of this subsection shall be construed as prohibiting any regulated entity from purchasing any commercial insurance policy or fidelity bond, except that, subject to any requirement described in paragraph (5)(A)(iii), such insurance policy or bond shall not cover any legal or liability expense of the regulated entity which is described in paragraph (5)(A).´´.

Sec. 1115. Reporting of Fraudulent Loans.

Part 1 of subtitle C of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631 et seq.), as amended by this Act, is amended by adding at the end the following:

``SEC. 1379E. REPORTING OF FRAUDULENT LOANS.

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

``(b) Protection From Liability for Reports.—Any regulated entity that, in good faith, makes a report pursuant to subsection (a), and any entity-affiliated party, that, in good faith, makes or requires another to make any such report, shall not be liable to any person under any provision of law or regulation, any constitution, law, or regulation of any State or political subdivision of any State, or under any contract or other legally enforceable agreement (including any arbitration agreement) for such report or for any failure to provide notice of such report to the person who is the subject of such report or any other persons identified in the report.´´.

Sec. 1116. Inclusion of Minorities and Women; Diversity in Agency Workforce.

Section 1319A of the Housing and Community Development Act of 1992 (12 U.S.C. 4520) is amended—

(1) in the section heading, by striking "equal opportunity in solicitation of contracts" and inserting "minority and women inclusion; diversity requirements";

(2) in subsection (a), by striking "(a) In General.—Each enterprise" and inserting "(e) Outreach.—Each regulated entity"; and

(3) by striking subsection (b);

(4) by inserting before subsection (e), as so redesignated by paragraph (2) of this section, the following new subsections:

``(a) Office of Minority and Women Inclusion.—Each regulated entity shall establish an Office of Minority and Women Inclusion, or designate an office of the entity, that shall be responsible for carrying out this section and all matters of the entity relating to diversity in management, employment, and business activities in accordance with such standards and requirements as the Director shall establish.

``(b) Inclusion in All Levels of Business Activities.—Each regulated entity shall develop and implement standards and procedures to ensure, to the maximum extent possible, the inclusion and utilization of minorities (as such term is defined in section 1204(c) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note)) and women, and minority- and women-owned businesses (as such terms are defined in section 21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)) (including financial institutions, investment banking firms, mortgage banking firms, asset management firms, broker-dealers, financial services firms, underwriters, accountants, brokers, investment consultants, and providers of legal services) in all business and activities of the regulated entity at all levels, including in procurement, insurance, and all types of contracts (including contracts for the issuance or guarantee of any debt, equity, or mortgage-related securities, the management of its mortgage and securities portfolios, the making of its equity investments, the purchase, sale and servicing of single- and multi-family mortgage loans, and the implementation of its affordable housing program and initiatives). The processes established by each regulated entity for review and evaluation for contract proposals and to hire service providers shall include a component that gives consideration to the diversity of the applicant.

``(c) Applicability.—This section shall apply to all contracts of a regulated entity for services of any kind, including services that require the services of investment banking, asset management entities, broker-dealers, financial services entities, underwriters, accountants, investment consultants, and providers of legal services.

``(d) Inclusion in Annual Reports.—Each regulated entity shall include, in the annual report submitted by the entity to the Director pursuant to section 309(k) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(k)), section 307(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(c)), and section 20 of the Federal Home Loan Bank Act (12 U.S.C. 1440), as applicable, detailed information describing the actions taken by the entity pursuant to this section, which shall include a statement of the total amounts paid by the entity to third party contractors since the last such report and the percentage of such amounts paid to businesses described in subsection (b) of this section.´´; and

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

``(f) Diversity in Agency Workforce.—The Agency shall take affirmative steps to seek diversity in its workforce at all levels of the agency consistent with the demographic diversity of the United States, which shall include—

``(1) heavily recruiting at historically Black colleges and universities, Hispanic-serving institutions, women's colleges, and colleges that typically serve majority minority populations;

``(2) sponsoring and recruiting at job fairs in urban communities, and placing employment advertisements in newspapers and magazines oriented toward women and people of color;

``(3) partnering with organizations that are focused on developing opportunities for minorities and women to place talented young minorities and women in industry internships, summer employment, and full-time positions; and

``(4) where feasible, partnering with inner-city high schools, girls' high schools, and high schools with majority minority populations to establish or enhance financial literacy programs and provide mentoring.´´.

Sec. 1117. Temporary Authority for Purchase of Obligations of Regulated Entities by Secretary of Treasury.

(a) Fannie Mae.—

Section 304 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719) is amended by adding at the end the following new subsection:

``(g) Temporary Authority of Treasury to Purchase Obligations and Securities; Conditions.—

``(1) Authority to purchase.—

``(A) General authority.—In addition to the authority under subsection (c) of this section, the Secretary of the Treasury is authorized to purchase any obligations and other securities issued by the corporation under any section of this Act, on such terms and conditions as the Secretary may determine and in such amounts as the Secretary may determine. Nothing in this subsection requires the corporation to issue obligations or securities to the Secretary without mutual agreement between the Secretary and the corporation. Nothing in this subsection permits or authorizes the Secretary, without the agreement of the corporation, to engage in open market purchases of the common securities of the corporation.

``(B) Emergency determination required.—In connection with any use of this authority, the Secretary must determine that such actions are necessary to—

``(i) provide stability to the financial markets;

``(ii) prevent disruptions in the availability of mortgage finance; and

``(iii) protect the taxpayer.

``(C) Considerations.—To protect the taxpayers, the Secretary of the Treasury shall take into consideration the following in connection with exercising the authority contained in this paragraph:

``(i) The need for preferences or priorities regarding payments to the Government.

``(ii) Limits on maturity or disposition of obligations or securities to be purchased.

``(iii) The corporation's plan for the orderly resumption of private market funding or capital market access.

``(iv) The probability of the corporation fulfilling the terms of any such obligation or other security, including repayment.

``(v) The need to maintain the corporation's status as a private shareholder-owned company.

``(vi) Restrictions on the use of corporation resources, including limitations on the payment of dividends and executive compensation and any such other terms and conditions as appropriate for those purposes.

``(D) Reports to congress.—Upon exercise of this authority, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate as to the necessity for the purchase and the determinations made by the Secretary under subparagraph (B) and with respect to the considerations required under subparagraph (C), and the size, terms, and probability of repayment or fulfillment of other terms of such purchase.

``(2) Rights; sale of obligations and securities.—

``(A) Exercise of rights.—The Secretary of the Treasury may, at any time, exercise any rights received in connection with such purchases.

``(B) Sale of obligation and securities.—The Secretary of the Treasury may, at any time, subject to the terms of the security or otherwise upon terms and conditions and at prices determined by the Secretary, sell any obligation or security acquired by the Secretary under this subsection.

``(C) Application of sunset to purchased obligations or securities.—The authority of the Secretary of the Treasury to hold, exercise any rights received in connection with, or sell, any obligations or securities purchased is not subject to the provisions of paragraph (4).

``(3) Funding.—For the purpose of the authorities granted in this subsection, the Secretary of the Treasury may use the proceeds of the sale of any securities issued under chapter 31 of Title 31, and the purposes for which securities may be issued under chapter 31 of Title 31 are extended to include such purchases and the exercise of any rights in connection with such purchases. Any funds expended for the purchase of, or modifications to, obligations and securities, or the exercise of any rights received in connection with such purchases under this subsection shall be deemed appropriated at the time of such purchase, modification, or exercise.

``(4) Termination of authority.—The authority under this subsection (g), with the exception of paragraphs (2) and (3) of this subsection, shall expire December 31, 2009.

``(5) Authority of the director with respect to executive compensation.—The Director shall have the power to approve, disapprove, or modify the executive compensation of the corporation, as defined under Regulation S-K, 17 C.F.R. 229.´´.

(b) Freddie Mac.—

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 subsection:

``(l) Temporary Authority of Treasury to Purchase Obligations and Securities; Conditions.—

``(1) Authority to purchase.—

``(A) General authority.—In addition to the authority under subsection (c) of this section, the Secretary of the Treasury is authorized to purchase any obligations and other securities issued by the Corporation under any section of this Act, on such terms and conditions as the Secretary may determine and in such amounts as the Secretary may determine. Nothing in this subsection requires the Corporation to issue obligations or securities to the Secretary without mutual agreement between the Secretary and the Corporation. Nothing in this subsection permits or authorizes the Secretary, without the agreement of the Corporation, to engage in open market purchases of the common securities of the Corporation.

``(B) Emergency determination required.—In connection with any use of this authority, the Secretary must determine that such actions are necessary to—

``(i) provide stability to the financial markets;

``(ii) prevent disruptions in the availability of mortgage finance; and

``(iii) protect the taxpayer.

``(C) Considerations.—To protect the taxpayers, the Secretary of the Treasury shall take into consideration the following in connection with exercising the authority contained in this paragraph:

``(i) The need for preferences or priorities regarding payments to the Government.

``(ii) Limits on maturity or disposition of obligations or securities to be purchased.

``(iii) The Corporation's plan for the orderly resumption of private market funding or capital market access.

``(iv) The probability of the Corporation fulfilling the terms of any such obligation or other security, including repayment.

``(v) The need to maintain the Corporation's status as a private shareholder-owned company.

``(vi) Restrictions on the use of Corporation resources, including limitations on the payment of dividends and executive compensation and any such other terms and conditions as appropriate for those purposes.

``(D) Reports to congress.—Upon exercise of this authority, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate as to the necessity for the purchase and the determinations made by the Secretary under subparagraph (B) and with respect to the considerations required under subparagraph (C), and the size, terms, and probability of repayment or fulfillment of other terms of such purchase.

``(2) Rights; sale of obligations and securities.—

``(A) Exercise of rights.—The Secretary of the Treasury may, at any time, exercise any rights received in connection with such purchases.

``(B) Sale of obligation and securities.—The Secretary of the Treasury may, at any time, subject to the terms of the security or otherwise upon terms and conditions and at prices determined by the Secretary, sell any obligation or security acquired by the Secretary under this subsection.

``(C) Application of sunset to purchased obligations or securities.—The authority of the Secretary of the Treasury to hold, exercise any rights received in connection with, or sell, any obligations or securities purchased is not subject to the provisions of paragraph (4).

``(3) Funding.—For the purpose of the authorities granted in this subsection, the Secretary of the Treasury may use the proceeds of the sale of any securities issued under chapter 31 of Title 31, and the purposes for which securities may be issued under chapter 31 of Title 31 are extended to include such purchases and the exercise of any rights in connection with such purchases. Any funds expended for the purchase of, or modifications to, obligations and securities, or the exercise of any rights received in connection with such purchases under this subsection shall be deemed appropriated at the time of such purchase, modification, or exercise.

``(4) Termination of authority.—The authority under this subsection (l), with the exception of paragraphs (2) and (3) of this subsection, shall expire December 31, 2009.

``(5) Authority of the director with respect to executive compensation.—The Director shall have the power to approve, disapprove, or modify the executive compensation of the Corporation, as defined under Regulation S-K, 17 C.F.R. 229.´´.

(c) Federal Home Loan Banks.—

Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended by adding at the end the following new subsection:

``(l) Temporary Authority of Treasury to Purchase Obligations; Conditions.—

``(1) Authority to purchase.—

``(A) General authority.—In addition to the authority under subsection (i) of this section, the Secretary of the Treasury is authorized to purchase any obligations issued by any Federal Home Loan Bank under any section of this Act, on such terms and conditions as the Secretary may determine and in such amounts as the Secretary may determine. Nothing in this subsection requires a Federal Home Loan Bank to issue obligations or securities to the Secretary without mutual agreement between the Secretary and the Federal Home Loan Bank. Nothing in this subsection permits or authorizes the Secretary, without the agreement of the Federal Home Loan Bank, to engage in open market purchases of the common securities of any Federal Home Loan Bank.

``(B) Emergency determination required.—In connection with any use of this authority, the Secretary must determine that such actions are necessary to—

``(i) provide stability to the financial markets;

``(ii) prevent disruptions in the availability of mortgage finance; and

``(iii) protect the taxpayer.

``(C) Considerations.—To protect the taxpayers, the Secretary of the Treasury shall take into consideration the following in connection with exercising the authority contained in this paragraph:

``(i) The need for preferences or priorities regarding payments to the Government.

``(ii) Limits on maturity or disposition of obligations or securities to be purchased.

``(iii) The Federal Home Loan Bank's plan for the orderly resumption of private market funding or capital market access.

``(iv) The probability of the Federal Home Loan Bank fulfilling the terms of any such obligation or other security, including repayment.

``(v) The need to maintain the Federal Home Loan Bank's status as a private shareholder-owned company.

``(vi) Restrictions on the use of Federal Home Loan Bank resources, including limitations on the payment of dividends and executive compensation and any such other terms and conditions as appropriate for those purposes.

``(D) Reports to congress.—Upon exercise of this authority, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate as to the necessity for the purchase and the determinations made by the Secretary under subparagraph (B) and with respect to the considerations required under subparagraph (C), and the size, terms, and probability of repayment or fulfillment of other terms of such purchase.

``(2) Rights; sale of obligations and securities.—

``(A) Exercise of rights.—The Secretary of the Treasury may, at any time, exercise any rights received in connection with such purchases.

``(B) Sale of obligations.—The Secretary of the Treasury may, at any time, subject to the terms of the security or otherwise upon terms and conditions and at prices determined by the Secretary, sell any obligation acquired by the Secretary under this subsection.

``(C) Application of sunset to purchased obligations.—The authority of the Secretary of the Treasury to hold, exercise any rights received in connection with, or sell, any obligations purchased is not subject to the provisions of paragraph (4).

``(3) Funding.—For the purpose of the authorities granted in this subsection, the Secretary of the Treasury may use the proceeds of the sale of any securities issued under chapter 31 of Title 31, and the purposes for which securities may be issued under chapter 31 of Title 31 are extended to include such purchases and the exercise of any rights in connection with such purchases. Any funds expended for the purchase of, or modifications to, obligations and securities, or the exercise of any rights received in connection with such purchases under this subsection shall be deemed appropriated at the time of such purchase, modification, or exercise.

``(4) Termination of authority.—The authority under this subsection (l), with the exception of paragraphs (2) and (3) of this subsection, shall expire December 31, 2009.

``(5) Authority of the director with respect to executive compensation.—The Director shall have the power to approve, disapprove, or modify the executive compensation of the Federal Home Loan Bank, as defined under Regulation S-K, 17 C.F.R. 229.´´.

Sec. 1118. Consultation Between the Director of the Federal Housing Finance Agency and the Board of Governors of the Federal Reserve System to Ensure Financial Market Stability.

Subsection (a) of section 1313 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513), as amended by the preceding provisions of this Act, is further amended by adding at the end the following new paragraph:

``(3) Coordination with the chairman of the board of governors of the federal reserve system.—

``(A) Consultation.— The Director shall consult with, and consider the views of, the Chairman of the Board of Governors of the Federal Reserve System, with respect to the risks posed by the regulated entities to the financial system, prior to issuing any proposed or final regulations, orders, and guidelines with respect to the exercise of the additional authority provided in this Act regarding prudential management and operations standards, safe and sound operations of, and capital requirements and portfolio standards applicable to the regulated entities (as such term is defined in section 1303). The Director also shall consult with the Chairman regarding any decision to place a regulated entity into conservatorship or receivership.

``(B) Information sharing.—To facilitate the consultative process, the Director shall share information with the Board of Governors of the Federal Reserve System on a regular, periodic basis as determined by the Director and the Board regarding the capital, asset and liabilities, financial condition, and risk management practices of the regulated entities as well as any information related to financial market stability.

``(C) Termination of consultation requirement.—The requirement of the Director to consult with the Board of Governors of the Federal Reserve System under this paragraph shall expire at the conclusion of December 31, 2009.´´.