Improving the Effectiveness of GSE Oversight: Legislative Proposals in the 108th Congress

Improving the Effectiveness of GSE Oversight: Legislative Proposals in the 108th Congress

Order Code RL32069
CRS Report for Congress
Received through the CRS Web
Improving the Effectiveness of GSE Oversight:
Legislative Proposals in the 108th Congress
Updated January 6, 2005
Loretta Nott
Analyst in Economics
Government and Finance Division
Mark Jickling
Specialist in Public Finance
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

Improving the Effectiveness of GSE Oversight:
Legislative Proposals in the 108th Congress
Summary
Fannie Mae and Freddie Mac, two of the largest government-sponsored
enterprises (GSEs), were created to establish a secondary mortgage market in order
to improve the distribution of capital available for home mortgage financing. To help
these institutions accomplish this mission, Congress granted them several statutory
benefits not available to other private companies. The advantages of GSE status have
helped the enterprises to grow rapidly and become the dominant players in the
secondary mortgage market.
In 1992, Congress established the Office of Federal Housing Enterprise
Oversight (OFHEO), an independent agency within the Department of Housing and
Urban Development (HUD), to oversee the financial safety and soundness of the
enterprises. OFHEO is authorized to set capital requirements, conduct annual risk-
based examinations, and generally enforce compliance with safety and soundness
standards.
With the rapid growth in the GSEs, questions have been raised about the
effectiveness of the current regulatory regime. Several legislative proposals
introduced in the past addressed GSE regulatory reform, but Congress did not take
action on them. However, with the recent accounting problems at both Fannie Mae
and Freddie Mac, the adequacy of GSE regulation has become a prominent
legislative issue once again.
Four bills were considered in the 108th Congress that aimed to strengthen the
current regulatory framework and improve the effectiveness of GSE supervision:
H.R. 2575 (Representative Baker), H.R. 2803 (Representative Royce), S. 1508
(Senators Hagel\Sununu\Dole), and S. 1656 (Senator Corzine). On March 26, 2004,
Chairman Shelby of the Senate Banking Committee released a draft bill, which was
offered as a substitute for S. 1508 during markup on April 1, 2004, and passed by the
committee with several amendments. No further legislative action was taken during
the 108th Congress. While the proposals took somewhat different approaches to
regulatory reform, all appeared to
! abolish OFHEO and reconstitute the GSE regulator within the
Department of the Treasury, or as an independent agency;
! increase the budget autonomy of the new office by exempting its
assessments from the annual appropriations process; and
! enhance the safety and soundness and enforcement tools available
to the new regulator.
This CRS report describes OFHEO’s current regulatory framework and provides
a detailed analysis of legislative proposals in the 108th Congress that aimed to
strengthen the safety and soundness regulation of the GSEs. This report is an
historical record of consideration of this issue in the 108th Congress and will not be
updated.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Current Regulatory Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Minimum Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Critical Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Risk-Based Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Enforcement Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Legislative Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reconstituting the GSE Regulator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Mission Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Capital Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Enforcement Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Administration’s View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
List of Tables
Table 1. Side-By-Side Comparison of GSE Regulation Proposals . . . . . . . . . . . 15

Improving the Effectiveness of GSE
Oversight: Legislative Proposals in the 108th
Congress
Introduction
Government-sponsored enterprises (GSEs) are privately owned, congressionally
chartered financial institutions created for specific public policy purposes. They
benefit from certain exemptions and privileges, including an implied federal
guarantee, intended to enhance their ability to borrow money. The two largest GSEs
are Fannie Mae and Freddie Mac (herein referred to as the enterprises or GSEs).1
These GSEs were created by Congress to establish and maintain a secondary
mortgage market, increasing liquidity and improving the distribution of capital
available for home mortgage financing.2 To help these institutions accomplish this
mission, Congress has provided them with several benefits not available to other
financial institutions.3 These statutory benefits provide the enterprises with lower
funding costs, the ability to operate with less capital, and lower direct costs.4 The
advantages of GSE status have enabled the enterprises to grow rapidly and become
dominant players in the secondary mortgage market.
1 The other GSEs are the Federal Home Loan Bank System, the Farm Credit System, and
Farmer Mac. Sallie Mae, a sixth GSE, is in the process of being fully privatized.
2 For a detailed description of the development of the U.S. secondary mortgage market, see
Office of Federal Housing Enterprise Oversight, Report to Congress, June 2003, at
[http://www.ofheo.gov/media/pdf/WEBsiteOFHEOREPtoCongress03.pdf], visited on Oct.
4, 2004.
3 These statutory benefits include (1) exemption from state and local taxes, (2) a line of
credit with the U.S. Treasury up to $2.25 billion, (3) eligibility of their debt to serve as
collateral for public deposits, (4) eligibility of their securities for Federal Reserve open
market purchases, (5) eligibility for their corporate securities to be purchased without limit
by federally regulated financial institutions, (6) assignment of mortgage-related securities
they have issued or guaranteed to the second-lowest credit risk category at depository
institutions, and (7) exemption from the registration requirements of the Securities and
Exchange Commission.
4 For more information on these advantages, see the following reports: U.S. Department of
the Treasury, Government Sponsorship of the Federal National Mortgage Association and
the Federal Home Loan Mortgage Corporation, July 11, 1996; U.S. Congressional Budget
Office, Assessing the Public Costs and Benefits of Fannie Mae and Freddie Mac, May 1996;
and U.S. Congressional Budget Office, Federal Subsidies and the Housing GSEs, May
2001.

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Congress has always been concerned that the safety and soundness of the
enterprises be maintained so that they can meet their public policy mission and not
pose risks to taxpayers. Prior to 1992, oversight was the responsibility of the
Department of Housing and Urban Development (HUD) and the Federal Home Loan
Bank Board. In 1992, Congress established the Office of Federal Housing Enterprise
Oversight (OFHEO), an independent agency within HUD, to oversee the financial
safety and soundness of the enterprises. The office is authorized to set capital
requirements, conduct annual risk-based examinations, and generally enforce
compliance with safety and soundness standards.
Since the creation of OFHEO, mortgage investments at the GSEs have grown
by more than 620% to $1.4 trillion. The GSEs have become two of the largest
private debt issuers in the world. At the end of 2002, the combined debt of the
enterprises totaled $1.5 trillion — an amount equal to almost half of all publicly held
federal debt. In addition to enterprise debt, investors now hold over $1.7 trillion in
mortgage-backed securities issued by Fannie Mae and Freddie Mac.5
As a result of the rapid growth of these institutions and their implied federal
backing, there has been an increasing concern that the enterprises may pose a
problem of systemic risk to the nation’s financial system.6 At the same time,
questions have been raised about the effectiveness of the current regulatory
environment. There have been several legislative proposals introduced in the past
to address these issues, but Congress did not take action on them.
Events in the past two years, however, have brought a new urgency to this issue.
In 2003, Freddie Mac admitted that it had used improper accounting policies to create
the appearance of steady earnings growth and issued a restatement of financial
results, revising net income for 2000-2002 upwards by $5 billion.7 OFHEO imposed
a $125 million fine and is pursuing civil actions against several former Freddie
executives.8 Following the special examination of Freddie Mac, OFHEO began to
5 For more information, see Office of Federal Housing Enterprise Oversight, FY 2003-2008
Strategic Plan, Sep. 30, 2003, at [http://www.ofheo.gov/media/pdf/0308stratplan93003a.
pdf], visited Oct. 4, 2004.
6 For a comprehensive analysis of these risks, see Office of Federal Housing Enterprise
Oversight, Systemic Risk: Fannie Mae, Freddie Mac, and the Role of OFHEO, Feb. 2003,
at [http://www.ofheo.gov/media/archive/docs/reports/sysrisk.pdf], visited Oct. 4, 2004.
Furthermore, the IMF has recently stated that the GSE “regulators need to look closely at
whether agencies’ capital adequacy is sufficient, especially bearing in mind the questions
about internal controls that have emerged in Freddie Mac....it is unclear whether [the GSEs]
have taken sufficient account of the risk that the market may not be deep enough to allow
them to continuously hedge their growing portfolios in times of stress.” For more
information, see IMF, Global Financial Stability Report: Market Developments and Issues,
Sept. 2003, pp. 16-22, at [http://www.imf.org/external/pubs/ft/gfsr/2003/02/index.htm],
visited on Oct. 4, 2004.
7 For more information, see CRS Report RS21567, Accounting and Management Problems
at Freddie Mac, by Mark Jickling.
8 For more information, see the Dec. 10, 2003 press release issued by OFHEO at
(continued...)

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review the accounting policies and practices at Fannie Mae, and recently published
its preliminary findings on September 22, 2004.9 OFHEO charges that Fannie Mae
did not follow generally accepted accounting practices in two critical areas: (1)
amortization of discounts, premiums, and fees involved in the purchase of home
mortgages and (2) accounting for financial derivatives contracts. According to
OFHEO, these deviations from standard accounting rules allowed Fannie Mae to
reduce volatility in reported earnings, present investors with an artificial picture of
steadily growing profits, and, in at least one case, to meet financial performance
targets that triggered the payment of bonuses to company executives.10 On December
15, 2004, the Securities and Exchange Commission (SEC) directed Fannie Mae to
restate its accounting results since 2001 after finding inadequacies in Fannie's
accounting policies and methodologies. These accounting problems, and the related
safety and soundness concerns, have made GSE regulatory reform a prominent
legislative issue once again.
Four bills were considered in the 108th Congress that aimed to strengthen the
current regulatory framework and improve the effectiveness of GSE supervision:
H.R. 2575 (Representative Baker), H.R. 2803 (Representative Royce), S. 1508
(Senators Hagel\Sununu\Dole), and S. 1656 (Senator Corzine).
In addition, the House Financial Services Committee released a manager’s
amendment in preparation for a markup originally scheduled for October 8, 2003.
However, on October 7, 2003, the Department of the Treasury announced its
opposition to the manager’s amendment, claiming the bill “falls short of real
reform.”11 Subsequently, the markup was postponed and the current status of the
manager’s amendment remains uncertain.
On March 26, 2004, Chairman Shelby of the Senate Banking Committee
released a draft GSE reform bill. On April 1, 2004, the draft was offered at
committee markup as an amendment in the nature of a substitute for S. 1508, and was
passed with several further amendments. No further legislative action was taken on
this or any other GSE reform bill before the adjournment of the 108th Congress.
While the proposals take somewhat different approaches to regulatory reform,
all appear to
! abolish OFHEO and reconstitute the GSE regulator within the
Department of the Treasury, or as an independent agency;
8 (...continued)
[http://www.ofheo.gov/News.asp?FormMode=Release&ID=119], visited on Oct. 4, 2004.
9 Office of Federal Housing Enterprise Oversight, Report of Findings to Date: Special
Examination of Fannie Mae, Sept. 17, 2004, available at [http://www.ofheo.gov/media/
pdf/FNMfindingstodate17sept04.pdf], visited on Oct. 4, 2004.
10 For a detailed summary of OFHEO’s findings, see CRS Report RS21949, Accounting
Problems at Fannie Mae, by Mark Jickling.
11 Robert Blackwell and Jody Shenn, “It’s Official: White House Won’t Back Oxley GSE
Bill,” American Banker, Oct. 8, 2003.

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! increase the budget autonomy of the new office by exempting its
assessments from the annual appropriations process; and
! enhance the safety and soundness and enforcement tools available
to the new regulator.
Treasury Secretary John Snow appeared before the House Financial Services
Committee on September 10, 2003, and then again before the Senate Banking
Committee on October 16, 2003, to outline the Administration’s recommendations
“for the essential, minimum requirements for a credible regulator”12 for the housing
GSEs. In addition to the creation of a new agency to oversee the safety and
soundness of all the housing GSEs (Fannie Mae, Freddie Mac, and the Federal Home
Loan Banks), the Treasury Secretary outlined several recommendations intended to
strengthen the new agency’s general regulatory, supervisory and enforcement powers.
The President’s budget plan for FY2005 reiterates these recommendations, but also
specifically proposes that the new agency be placed within the Department of the
Treasury, “provided the Department is given adequate oversight authority.”13
Currently, there is no legislative proposal that encompasses all of the
Administration’s recommendations.
However, in testimony before the Senate Banking Committee, Federal Reserve
Board Chairman Alan Greenspan noted that “[w]orld-class regulation, by itself, may
not be sufficient and indeed, as suggested by Treasury Secretary Snow, may even
worsen the situation if market participants infer from such regulation that the
government is all the more likely to back GSE debt.”14 Concerned that this may
continue to encourage the enterprises to grow faster than the residential mortgage
market, posing a potential a risk to the nation’s financial system, the Federal Reserve
Board Chairman urged Congress to also consider limiting the GSEs’ debt issuance
and asset purchases. The Treasury Department, however, has recently claimed that
it already has the authority to limit the GSEs’ debt issuances and that such action is
currently being considered.15
This report describes OFHEO’s current regulatory framework and provides a
detailed analysis of the legislative proposals introduced in the 108th Congress that aim
12 Prepared testimony of John W. Snow, Secretary of the Treasury, in U.S. Congress, Senate
Committee on Banking, Housing and Urban Affairs, Proposals for Improving the Regulation
of the Housing GSEs, hearings, 108th Cong., 1st sess., Oct. 16, 2003, p. 2, at
[http://banking.senate.gov/_files/ACFB2.pdf], visited on Oct. 4, 2004.
13 See the Office of Management and Budget, Budget of the United States Government,
Fiscal Year 2005, Analytical Perspectives, p. 83, at [http://www.whitehouse.gov/omb/
budget/fy2005/pdf/spec.pdf], visited on Oct. 4, 2004.
14 Prepared testimony of Alan Greenspan, Chairman, Board of Governors of the Federal
Reserve System, in U.S. Congress, Senate Committee on Banking, Housing and Urban
Affairs, Proposals for Improving the Regulation of the Housing Government Sponsored
Enterprises, hearings, 108th Cong., 2nd sess., Feb. 24, 2004, p. 9, at
[http://banking.senate.gov/_files/ACF1BA.pdf], visited on Oct. 4, 2004.
15 Rob Blackwell, “A Treasury View on GSE Debt, And Unintended Consequences,”
American Banker, May 14, 2004.

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to strengthen the safety and soundness regulation of the enterprises. A short
summary of the Administration’s views on GSE oversight can be found in the final
section of this report.

The Current Regulatory Framework
OFHEO is an independent agency, within HUD, whose primary mission is to
oversee the financial safety and soundness of the enterprises. The office was
established by Congress with the passage of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (herein referred to as the Safety and
Soundness Act).16 In order to fulfill its mission, OFHEO is authorized to establish
and ensure compliance with capital standards for the enterprises, conduct annual risk-
based examinations to assess the management practices and financial condition of the
enterprises, and take enforcement actions as specified by the Safety and Soundness
Act. Mission regulation — ensuring the enterprises comply with their affordable
housing mandates — is within the purview of HUD.
OFHEO is under the management of a director, who is appointed by the
President and confirmed by the Senate, for a term of five years. The office is funded
through annual assessments collected from the enterprises on a semi-annual basis.
Unlike other financial regulators, however, OFHEO’s assessments are subject to the
annual congressional appropriations process.
Capital Standards
The Safety and Soundness Act mandated the adoption of three capital level
standards for the enterprises: (1) the minimum level, (2) the critical level and (3) the
“risk-based” level. The first two levels are considered static standards, where a
certain amount of capital is required to be held for every dollar of assets and may
vary according to the riskiness of the assets. The third level is a performance
standard derived from “stress tests.” These types of capital standards indicate how
well the capital on hand functions in keeping a company solvent under a variety of
adverse economic conditions. Their worth depends upon how well the stress tests
are structured.
The Minimum Level. The minimum capital standard requires each enterprise
to hold capital equal to the sum of 2.5% of its on-balance sheet assets, plus 0.45% of
the unpaid balance of mortgage-backed securities sold off-book, plus 0.45% of other
off-balance sheet obligations.
The Critical Level. The critical capital standard requires that the enterprises
hold capital equal to the sum of 1.25% of on-balance sheet assets, plus 0.25% of the
16 P.L. 102-550, Title XIII; 106 Stat. 3941 (1992). For a detailed analysis of the oversight
provisions of this law, see CRS Report RL32230, Regulation of Fannie Mae and Freddie
Mac Under the Federal Housing Enterprises Financial Safety and Soundness Act: A Legal
Analysis, by Nathan Brooks.

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unpaid balance of mortgage-backed securities, plus 0.25% of other off-book
obligations.
The Risk-Based Level. The risk-based capital standard requires each
enterprise to hold enough capital to cover both credit and interest rate risks, plus an
additional 30% for management and operations risk.17 Credit or default risk is the
risk that a borrower will default on the mortgage which the company holds as an
asset. Interest rate risk is the risk of loss should rates rise or fall dramatically. This
risk arises because funds borrowed by the enterprises may come due and have to be
refinanced at new interest rates on a different schedule than the funds received from
investments which earn yields set under different market conditions.
The Safety and Soundness Act specified several of the details regarding the risk-
based capital standard and directed OFHEO to adopt a financial regulation
implementing the standard by December 1, 1994. The final regulations, however,
were not issued until September 13, 2001. As specified by statute, the risk-based
capital standard involves a 10-year stress period, during which severe credit and
interest rate shocks occur simultaneously. The parameters of the stress test are
specified in the law. The required level of risk-based capital is determined as the
amount that allows the enterprises to remain solvent in every quarter of the 10-year
stress period, plus an additional 30% for operations and management risk. However,
as a result of innovations in handling financial risk, the risk-based standards have
turned out to be less strict than the minimum standards.
Based on these three capital standards, Congress defined four classifications
with respect to meeting them: (1) adequately capitalized, if both the risk-based and
the minimum levels are met; (2) undercapitalized, if the minimum level is met, but
not the risk-based; (3) significantly undercapitalized, if only the critical capital level
is met; and (4) critically undercapitalized, if none of the levels is met by an
enterprise.
Enforcement Actions
The range of enforcement actions available to OFHEO is largely dependent
upon the capital classifications. For the adequately capitalized category, there are no
prescribed supervisory actions, but cease-and-desist orders may be issued for conduct
which seriously threatens the enterprise’s capital base. An enterprise in the
undercapitalized classification must have a capital restoration plan approved by the
office and may not make any capital distribution that could result in further slippages.
If no plan is approved or an approved plan is not complied with, the office is
authorized to reclassify the enterprise downward. For the significantly
undercapitalized class, a capital restoration plan and any capital distributions must
be approved. Additional limits may be imposed on growth, activities may be
restricted, new capital may be required, and, should the restoration plan not be
approved or followed, the office is authorized to appoint a conservator to take over
operations. For a critically undercapitalized enterprise, the office shall appoint a
17 Congress arbitrarily set the capital standard for management and operations risk at 30%.

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conservator unless there is a finding of adverse impact on financial markets and that
such appointment is not in the public interest.
Legislative Proposals
Four bills were introduced in the 108th Congress that aimed to strengthen
OFHEO’s current statutory framework: H.R. 2575, H.R. 2803, S. 1508, and S. 1656.
In addition, the House Financial Services Committee released a manager’s
amendment in preparation for a markup originally scheduled for October 8, 2003,
that was subsequently postponed. On March 26, 2004, Chairman Shelby of the
Senate Banking Committee released a draft bill, which was amended and approved
by the Banking Committee on April 1, 2004, after being adopted as an amendment
in the nature of a substitute for S. 1508.
A side-by-side comparison of the major provisions of these bills and drafts can
be found in Table 1 at the end of this report.18 While the approaches to regulatory
reform vary somewhat, all the legislative proposals address (1) reconstituting the
GSE regulator, (2) funding, (3) mission approval, (4) capital standards and (5)
enforcement authority. Each of these issues will be discussed in detail below.
Reconstituting the GSE Regulator
All the bills propose to abolish OFHEO and replace it either with a new office
located within the Department of the Treasury, or, in the case of S. 1508 (as passed
by the Banking Committee) bill, with an independent agency to regulate the housing
GSEs, including the FHLBs. S. 1508 (as introduced by Senators Hagel, Sununu, and
Dole) would establish the Office of Federal Enterprise Supervision (OFES), an
agency in Treasury with the same regulatory responsibilities for safety and soundness
oversight as OFHEO. S. 1656 and the House Financial Services manager’s
amendment would do the same, except S. 1656 would name the new entity the Office
of Federal Housing Enterprise Supervision (OFHES) and the manager’s amendment
would name it the Office of Housing Finance Supervision (OHFS). H.R. 2575
proposes to rename the Office of Thrift Supervision (OTS) as the Office of Housing
Finance Supervision (OHFS) and transfer the authority to regulate the safety and
soundness of the enterprises to this new office. In addition to OFHEO, H.R. 2803
would also abolish the Federal Housing Finance Board (FHFB), the independent
regulator responsible for overseeing the Federal Home Loan Banks (FHLBs), and
establishes the Office of Housing Finance Oversight (OFHO) in Treasury to succeed
the authority of both OFHEO and FHFB.
Historically, changes in the regulatory environment for the enterprises have
tended to reflect the evolving role of GSEs in housing policy. With the growing
dominance of the enterprises in U.S. mortgage markets and the possible risks they
pose to the financial system, there has been a growing consensus about the potential
18 S. 1508 as introduced is not included in the side-by-side, as all of its provisions were
replaced by Chairman Shelby’s draft bill, which was adopted during committee markup as
an amendment in the nature of a substitute.

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gains from reconstituting the safety and soundness regulator under the auspices of the
Treasury. For example, if the office is established within Treasury, it can benefit
from Treasury’s financial expertise and prominence. This action not only can be seen
as creating opportunities for coordination and sharing of expertise with OTS and the
Office of the Comptroller of the Currency (OCC), the two other financial regulators
under Treasury, but also help reinforce the importance of the regulator’s mission for
safety and soundness oversight.
Furthermore, it is a fundamental principle of financial regulation that the office
be independent and at arm’s length from the enterprises. In a 1997 report, GAO
noted that a housing GSE regulator needs to have “the independence and prominence
that would allow it to act independently of the influence of the housing GSEs, which
are large and politically influential institutions. If a GSE had more political clout and
prominence that its regulator, it would be that much more difficult for the regulator
to implement corrective action.”19 Establishing the safety and soundness regulator
in Treasury, allows the office to acquire the immediate level of government
prominence that is thought necessary for overseeing the enterprises.
Although the benefits of reconstituting the GSE regulator within Treasury are
well recognized, there remains considerable debate over how involved Treasury
should be with the regulatory responsibilities of the new office. The Administration
has clearly stated that it will only support proposals for reconstituting the GSE
regulator within Treasury that require some degree of policy accountability to the
Secretary of the Treasury.20 Although H.R. 2803 would subject the director to the
general oversight of the Secretary of the Treasury, H.R. 2575, the House Financial
Services manager’s amendment, S. 1508 (as introduced by Senators Hagel, Sununu,
and Dole), and S. 1656 would all prohibit the Secretary of the Treasury from
involvement in the authority of the director of the office.
If an agreement cannot be reached on this issue, other options such as
establishing a new stand-alone agency, may be considered, as S. 1508 (as passed by
the Banking Committee) proposes. On February 10, 2003, Comptroller General
David Walker testified in favor of creating a single stand-alone regulator for all the
housing GSEs.21
19 U.S. Government Accountability Office, Government-Sponsored Enterprises: Advantages
and Disadvantages of Creating a Single Housing GSE Regulator, GAO/GGD-97-139, July
1997, p. 14.
20 For more information on the Administration’s recommendations for improving GSE
oversight, see “The Administration’s View” section of this report.
21 Prepared testimony of David Walker, Comptroller General of the United States in U.S.
Congress, Senate Committee on Banking, Housing and Urban Affairs, Proposals to Improve
the Regulatory Regime for Government Sponsored Enterprises, hearings, 108th Congress,
2nd sess., Feb. 10, 2004, at [http://www.banking.senate.gov/_files/walker.pdf], visited on
Oct. 4, 2004.

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Funding
As previously discussed, OFHEO’s assessments are subject to the annual
congressional appropriations process. For many years now, OFHEO has argued that
this process has hindered its ability to conduct effective long-term planning and
precludes flexibility in resource management. For instance, during periods when the
government has operated under a continuing resolution, OFHEO has been forced to
cut back on its activities. The agency also claims it is unable to respond quickly to
important regulatory concerns, such as Freddie Mac’s restatement of income, without
stretching thin its ability to conduct its primary safety and soundness oversight
responsibilities. In testimony before the Senate Committee on Banking, Housing and
Urban Affairs on July 17, 2003, the director of OFHEO noted that the “amount of
resources needed to address the issues surrounding Freddie Mac’s restatement is
straining our resources.”22
In light of these issues, OFHEO has recommended that the agency be
permanently funded, and exempt from the appropriations process, like other financial
regulators. OFHEO has said that permanent funding would permit the agency to
adapt more easily to changes in the enterprises’ activity and respond to problems in
a timely manner. The office has asked for assessment language similar to that of the
Federal Reserve, OTS, OCC and FHFB:
Amounts received by the Director from assessments under this section may be
deposited in the manner provided in section 5234 of the Revised Statutes (12
U.S.C. 192) with respect to assessments by the Comptroller of the Currency. 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.
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 or under any other
authority.”23
All the bills authorize the director of the new entity to collect annual
assessments, exempt from the annual congressional appropriations process.
However, H.R. 2575, H.R. 2803, S. 1508 (as introduced by Senators Hagel, Sununu,
and Dole) and S. 1656 also retain the requirement that assessments be placed in a
fund in the Treasury. The Constitution states that “No money shall be drawn from
the Treasury, but in consequence of appropriations made by law...”24 Thus, the bills
retain the requirement for appropriations, but create a permanent appropriation. In
22 Prepared testimony of the Honorable Armando Falcon, Jr., Director of the Office of
Federal Housing Enterprise Oversight, in U.S. Congress, Senate Committee on Banking,
Housing and Urban Affairs, Regulatory Oversight of Government Sponsored Enterprise
Accounting Practices, hearings, 108th Cong., 1st sess., July 17, 2003, at
[http://www.ofheo.gov/News.asp?FormMode=Release&ID=84], visited on Oct. 4, 2004.
OFHEO has also seen its requested funding cut by Congress in four of the past 10 years:
1997, 1998, 1999, and 2001.
23 12 U.S.C. § 1467. This is the assessments language found in the OTS statute.
24 U.S. Const., Art. I § 9, cl. 7.

CRS-10
these cases, the appropriations committees can still cap or otherwise restrict the use
of funds by an agency, which means that the offices established in these four bills are
not removed from the appropriations process. The legislative language found in the
House Financial Services manager’s amendment is similar to what applies to other
federal bank regulators and would completely remove the new regulator from the
appropriations process. S. 1508 (as passed by the Banking Committee) similarly
provides that the assessments collected by the new agency are not to be considered
government funds or appropriated monies.
The bills employ different language as to what costs the assessments are
authorized to cover. The House Financial Services manager’s amendment, both
Senate bills, and S. 1508 (as passed by the Banking Committee) state that the annual
assessments shall cover “all reasonable costs and expenses of the Office,” while H.R.
2803 and H.R. 2575 state that the assessments shall cover the costs of the director
“with respect to regulation and supervision.” However, it is not clear in the latter
case whether, for example, janitorial staff would be covered under this provision.
This could potentially expose the regulator to challenges by the enterprises regarding
the appropriateness of the assessments.
Also, with the exception of the House Financial Services manager’s amendment
and S. 1508 (as passed by the Banking Committee), the bills do not address the
regulator’s funding requirements during a crisis. In general, regulators have found
it important to maintain enough working capital to carry out elevated supervision in
a crisis, above and beyond normal costs. For example, in the statute for OTS
assessments, Congress authorized a working capital fund for emergency
circumstances. It permits OTS to collect fees and assessments in excess of actual
expenses to help maintain such a fund. As the four introduced bills are currently
written, the safety and soundness regulator may find itself without sufficient funding
in a time of crisis. The House Financial Services manager’s amendment and S. 1508
(as passed by the Banking Committee) authorize the GSE regulator to maintain a
working capital fund above and beyond the agency’s immediate operating expenses.
Mission Approval
In the current regulatory environment, HUD has the oversight responsibilities
for the housing mission of the enterprises, including approval authority for any new
program and enforcement of compliance with affordable housing goals. The decision
to split the oversight functions of mission approval from safety and soundness
represented the legislative compromise worked out over the potential conflicting
interests that could arise between these two functions. For instance, if HUD had to
take responsibility for protecting taxpayers from the risk of having to make good on
GSE losses by requiring higher capital, then HUD could be in the position of
simultaneously promoting housing credit and raising its cost. Alternatively, a
separate and independent safety and soundness regulator could set up the possibility
of the GSEs playing the regulators off against each other. For example, in order to
avoid a mission change which might lower profitability — such as raising goals for
specific forms or locations of housing credit — the enterprises might claim it to be
unsafe and have the change overruled.

CRS-11
Despite the separation of these functions, Congress included a temporary
provision in the Safety and Soundness Act that authorized OFHEO to consult with
HUD in regard to the safety and soundness of any proposed new programs. This
provision expired last year, but OFHEO and HUD continue to maintain open lines
of communication in regards to new program approval. Nevertheless, there is a
growing consensus that combining mission and safety and soundness regulation
would not necessarily create conflict. For example, other financial regulators, such
as the Federal Reserve, OTS, OCC, and the FDIC have been able to successfully
oversee both mission compliance and the financial condition of banks and thrifts for
years. In addition, the FHFB has combined the two with respect to the Federal Home
Loan Banks.
H.R. 2803, S. 1508 (as introduced by Senators Hagel, Sununu, and Dole), and
S. 1508 (as passed by the Banking Committee) would both transfer prior approval
authority of new programs to the director from the HUD Secretary. Under S. 1656,
new programs must be approved by the director, in consultation with the HUD
Secretary. H.R. 2575 proposes to retain prior approval authority with the HUD
Secretary, but expand the authority to all new “activities” rather than just new
“programs.” It would also remove the current 45-day time limit that HUD must meet
in order to avoid automatic approval of a proposed new program. The House
Financial Services manager’s amendment retains prior approval authority with the
HUD Secretary, as well as the 45-day time limit, but expands the Secretary’s
authority to both new and ongoing programs. The HUD Secretary is also required
to consult with the new safety and soundness regulator in regard to these programs.
All the bills, however, would retain the HUD Secretary’s authority for affordable
housing goals and/or fair housing responsibilities.
Capital Standards
As previously discussed, Congress has set in statute the minimum capital level
requirements for the enterprises, as well as the parameters of OFHEO’s risk-based
capital model. OFHEO does not have the authority to enforce capital requirements
based on alternative parameter assumptions or an increase in perceived risk due to
unsafe or unsound practices. In an appearance before the House Financial Services
Committee on February 11, 2003, Federal Reserve Board Chairman Alan Greenspan
argued that a regulator must have strong control over capital requirements “because
without it regulation, in my judgment, will be deficient.”25
H.R. 2575 and S. 1508 (as introduced by Senators Hagel, Sununu, and Dole)
would give the director discretion to apply alternative interest rate scenarios to the
risk-based capital model, including the assumptions regarding interest rates, home
prices, and new business. S. 1508 (as introduced by Senators Hagel, Sununu, and
Dole) also requires that the risk-based capital standard be similar to those used by
federal banking regulators. Similarly, these bills authorize the director to increase
the required minimum and critical capital levels for the enterprises by regulation or
order.
25 Damian Paletta, “Greenspan: Give Regulator Control Over GSEs’ Capital,” American
Banker, Feb. 12, 2004.

CRS-12
H.R. 2803 proposes that safety and soundness standards be prescribed by the
director pursuant to Section 39 of the Federal Deposit Insurance Act, which provides
the director broad powers in setting standards relating to issues, such as internal
controls, interest rate exposure, and asset growth. It could also possibly be
interpreted as providing the ability to set capital standards. The bill, however, offers
no provision to amend the capital standard requirements currently set out in statute.
Thus, current law’s specific language pertaining to capital may obviate the bill’s
broader construction, preventing any changes to the current standards.
S. 1656 mandates that the director review the adequacy of current risk-based
capital standards and, if necessary, make recommendations to Congress for changes
in the statutory levels. The bill would also authorize the director to modify the
capital level if the current level were determined to be inadequate to ensure safety
and soundness.
The House Financial Services manager’s amendment and S. 1508 (as passed by
the Banking Committee) would delete the statutory capital levels in current law and
authorize the director to establish risk-based capital requirements by regulation or
order. The director would file periodic reports with Congress, describing the risk-
based capital standard, the minimum and critical capital levels, and the methodology
by which levels were set.
Enforcement Authority
All the bills, except H.R. 2803, would authorize the director to reduce the
capital classification of an enterprise by one level if the director determines in writing
that an enterprise is engaging in conduct that could result in a rapid depletion of core
capital or that the value of the property subject to mortgages held or securitized by
the enterprise has decreased significantly. After notice and an opportunity for
hearing, the director determines whether an enterprise is in an unsafe or unsound
condition. These bills authorize the director to issue cease-and-desist orders to
address unsafe or unsound conditions or practices with respect to the enterprises and
their affiliates.26 H.R. 2575 , the House Financial Services manager’s amendment,
and S. 1508 (as passed by the Banking Committee) would also authorize the director
to appoint a receiver to liquidate or wind up the affairs of a critically undercapitalized
enterprise. Under S. 1508, however, the appointment of a receiver would not become
effective unless Congress failed to pass a joint resolution of disapproval within 45
days.
In regard to these bills, there are two important issues that are worth noting.
First, it is not clear from the legislative language what constitutes “a rapid depletion
of core capital.” This lack of clarity could prevent the regulator from responding
quickly in order to prevent a financial crisis.
26 “Enterprise-affiliated parties” are defined in the bills as (1) directors, officers, or
employees of a GSE, (2) shareholders, joint venture partners, or consultants, or (3)
independent contractors who knowingly or recklessly violate law, breach fiduciary duty, or
participate in an unsafe or unsound practice.

CRS-13
Second, the determination that an enterprise is in an unsafe or unsound
condition depends on the potential for a depletion of capital. Thus, the enforcement
powers hinge on the enterprises becoming undercapitalized. However, there are
circumstances upon which an enterprise can be considered adequately capitalized, yet
conducting unsafe or unsound practices. In this regard, H.R. 2803 would allow for
the same broad enforcement authority as federal bank regulators that does not depend
on the capitalization of the enterprises.
The Administration’s View
Treasury Secretary John Snow appeared before the House Financial Services
Committee on September 10, 2003, and then again before the Senate Banking
Committee on October 16, 2003, to outline the Administration’s recommendations
for improving GSE oversight. In his October 16th testimony, the Treasury Secretary
emphasized that these recommendations are not “a wish list of reforms that we would
like to see enacted...[but rather]...the minimum elements that are needed in a credible
regulatory structure, a structure that can ensure that our housing finance system
remains a strong and vibrant source of funding for expanding homeownership
opportunities in America.”27 These same recommendations are outlined in the
President’s budget proposal for FY2005.28
First, given that the present GSE structure “is ill-equipped to deal effectively
with the current size, complexity, and importance of Fannie Mae, Freddie Mac, and
the Federal Home Loan Banks,”29 the Administration recommends the creation of a
new agency to oversee the safety and soundness of all the housing GSEs.
Although Treasury Secretary Snow testified last year that the Administration
was not specifically requesting that the new agency be made a bureau of the Treasury
Department, he noted that it would support such a proposal as long as “the new
agency were established with adequate elements of policy accountability to the
Secretary of the Treasury.”30 The President’s budget proposal, however, specifically
advocates that the new agency be placed within the Department of the Treasury. The
Administration views the direct involvement of the Treasury Department in
providing policy guidance to the new regulatory agency as essential to reduce the risk
of regulatory capture and to ensure that the new regulator’s policies are not
reinforcing the market misperception of an implied guarantee. According to the
Treasury Secretary’s testimony last year, the Administration requires, at a minimum,
that the new agency clear any new regulations and policy statements to the Congress
27 Prepared testimony of John W. Snow, Secretary of the Treasury, in U.S. Congress, Senate
Committee on Banking, Housing and Urban Affairs, Proposals for Improving the Regulation
of the Housing GSEs, hearings, 108th Cong., 1st sess., Oct. 16, 2003, p. 2, at
[http://www.banking.senate.gov/_files/ACFB2.pdf], visited on Oct. 4, 2004.
28 Office of Management and Budget, Budget of the United States Government, Fiscal Year
2005, Analytical Perspectives, pp. 81-85.
29 Prepared testimony of Treasury Secretary John W. Snow, p. 2.
30 Prepared testimony of Treasury Secretary John W. Snow, p. 3.

CRS-14
through the Treasury Department, and that the Treasury Department have review
authority over the new agency’s budget.
Second, in order to strengthen the new agency’s general regulatory, supervisory
and enforcement powers, the Administration also recommends the following:
! funding the agency by assessments on its regulated entities that are
not subject to the congressional appropriations process;
! transferring the authority for approving new activities of the housing
GSEs from HUD to the new regulator;
! providing the agency the authority to direct, if necessary, the
liquidation of an enterprise’s assets; and
! giving the agency broad authority to set both minimum and risk-
based capital standards.
Finally, on a separate note, the Administration also encourages Congress to
consider eliminating the statutory requirement for the President to appoint five
members of the enterprises’ board of directors. Currently, the GSEs’ board of
directors shall have eighteen members, five of whom are appointed annually by the
President, and the remaining thirteen are elected annually by the common
stockholders. The Administration’s proposal would require that all eighteen board
members be elected by the shareholders for a one-year term.
On April 2, 2004, the Secretaries of the Treasury and HUD released a statement
of opposition to S. 1508 as reported by the Senate Banking Committee. The
statement referred to an amendment adopted in markup which allows Congress to
overrule the GSE regulator’s decision to appoint a receiver, and characterized this
amendment as significantly weakening “a core power needed for a strong regulator,”
likely to “reinforce the false impression” that the GSEs have a government
guarantee.31 (Under S. 1508 as reported, Congress has 45 days after the appointment
of a receiver to pass a joint resolution of disapproval.)
31 U.S. Department of the Treasury, Office of Public Affairs, Joint Statement of Treasury
Secretary John Snow and Housing and Urban Development Secretary Alphonso Jackson,
JS-1294, April 2, 2004, at [http://www.ustreas.gov/press/releases/js1294.htm], visited on
Oct. 4, 2004.

CRS-15
Table 1. Side-By-Side Comparison of GSE Regulation Proposals
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Short title
Federal Housing Enterprise
Secondary Mortgage
Secondary Mortgage
Housing Finance
Federal Housing
Regulatory Reform Act of
Market Enterprises
Market Enterprises
Regulatory
Enterprise Oversight
2004
Regulatory Improvement
Regulatory Improvement
Restructuring Act of
Modernization Act of
Act
Act
2003
2003
New regulatory
Federal Housing Enterprise
Office of Housing Finance
Office of Housing
Office of Housing
Office of Federal
entity to replace
Supervisory Agency
Supervision (OHFS)
Finance Supervision
Finance Oversight
Housing Enterprise
OFHEO
(FHESA)
(OHFS)
(OHFO)
Supervision (OFHES)
Composition and
Independent federal agency,
An office in the
Office of Thrift
Merges OFHEO and
An office in the
location of new
to assume functions of
Department of the
Supervision (OTS) in the
Federal Housing
Department of the
agency
OFHEO and Federal
Treasury. (Sec. 101)
Department of the
Finance Board (FHFB
Treasury, not to be
Housing Finance Board
Treasury to be renamed
— currently overseer
merged or consolidated
(FHFB). (Sec. 101)
as OHFS and to assume
of the Federal Home
with any other branch of
most of OFHEO’s
Loan banks) into
the Treasury. (Sec.
functions. (Sec. 101)
OHFO, a bureau in the
101)
Department of the
Treasury. (Sec. 101)

CRS-16
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Governance of new
Director appointed by the
Director appointed by the
Director of OTS will
Director appointed by
Director appointed by
agency
President, with advice and
President, with advice and
become director of
President, with advice
the President, with
consent of the Senate, to a
consent of the Senate, to a
OHFS. (Sec. 102)
and consent of the
advice and consent of
six-year term. Three deputy
five-year term. Deputy
Senate, to a five-year
the Senate, to a
directors to be appointed by
director to be appointed by
term. Two deputy
five-year term. OFHEO
director, to oversee (1) the
director, with such duties
directors: 1) for Safety
director to serve as
housing GSEs, (2) the
and powers as the director
and Soundness (to
director of OFHES for
FHLBs, and (3) the housing
may assign. (Sec. 101)
exercise OFHEO’s and
at least one year. (Sec.
mission and goals. (Sec.
FHFB’s authority) and
101)
101)
2) for Housing
Enterprise Charter
Creates a Federal Housing
Compliance (to
Enterprise Board, with no
exercise authority
executive powers, to advise
currently vested in the
the director. Board
Secretary of HUD).
members include secretaries
(Sec. 101)
of Treasury, HUD,
chairman of the SEC, and
the FHESA director. (Sec.
103)

CRS-17
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Qualifications of
U.S. citizen with knowledge
U.S. citizen neither
No financial interest in a
No financial interest in
U.S. citizen neither
director
of financial management or
employed by nor having a
housing GSE (in addition
a housing GSE or a
employed by nor having
oversight and capital
financial interest in a
to qualifications for head
Federal Home Loan
a financial interest in a
markets, including
housing GSE, with a
of OTS). (Sec. 102)
Bank (FHLB), U.S.
housing GSE. (Sec.
mortgage securities and
demonstrated
citizenship. (Sec. 101)
101)
housing markets. May not
understanding of housing
be employed by, or have a
finance. (Sec. 101)
financial interest in a GSE,
or have served as a GSE
director or executive for the
past three years.
(Sec. 101)

CRS-18
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Duties and
To oversee prudential
To oversee GSEs and
To ensure that GSEs
To prescribe
To ensure that GSEs
authorities of
operations of GSEs, to
ensure that they operate in
operate in a financially
regulations necessary
operate in a financially
director
ensure that GSEs maintain
a safe and sound manner
safe and sound manner,
to carry out the act and
safe and sound manner,
adequate capital and
(including maintenance of
carry out their missions
functions assigned to
carry out their missions
internal controls, to see that
adequate capital and
only through authorized
the director.
only through authorized
GSEs foster liquid,
internal controls), foster
activities, and remain
(Sec. 101)
activities, and remain
efficient, and competitive
liquid and competitive
adequately capitalized,
adequately capitalized,
housing markets, to ensure
mortgage markets, comply
and to exercise general
In addition to any other
and to exercise general
that GSEs comply with the
with applicable laws, rules,
supervisory and
authority of the
supervisory authority.
authorizing statutes and that
and regulations, and carry
regulatory authority.
director, to prescribe
they engage only in
out their missions only
safety and soundness
(Sec. 102)
activities consistent with
through activities
(Sec. 103)
standards pursuant to
those statutes, and to meet
authorized by their charters
Section 39 of the
at least twice a year with
and consistent with the
Federal Deposit
GSEs’ external auditors.
public interest.
Insurance Act. These
With respect to the FHLBs,
standards are to have
to ensure that they provide
(Sec. 102)
the same force and
funds to community
effect with regard to
financial institutions to
GSEs as federal bank
support small businesses
regulators’ standards
and farms and accept as
have with regard to
collateral whole interests in
federally insured
such loans.
depository institutions.
(Sec. 102)
(Sec. 102)

CRS-19
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Authority to
Yes. (Sec. 102)
Yes. (Sec. 102)
Yes. (Sec. 103)
Yes, but director may
Yes. (Sec. 102)
delegate
not let FHLBs take on
examination duties.
(Sec. 101)
Authority to hire
Yes: examiners, accountants
Yes, for three years
Yes, and director must
No provision.
Yes, for three years
examiners and
and economists may be
following enactment.
report to Congress within
after enactment.
accountants through
hired directly, in accordance
Director must report to
90 days on changes in
Director must report to
a streamlined
with the excepted service
Congress within 90 days
the hiring process,
Congress annually on
process
procedures. (Sec. 105)
on changes in the hiring
results, etc. (Sec. 104)
changes in the hiring
process, results, etc. (Sec.
process, results, etc.
104)
(Sec. 103)

CRS-20
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Source of agency
Director to establish and
Director to establish and
Agency to determine
Annual assessments to
Director to establish and
funding
collect annual assessments
collect annual assessments
amount of and collect
be collected from
collect annual
from GSEs, not to exceed
from GSEs, not to exceed
annual assessments from
GSEs and FHLBs.
assessments from GSEs,
reasonable costs of
reasonable costs of
GSEs, not exceeding
Secretary of HUD to
not to exceed
regulation, including
regulation, including
reasonable costs of
levy similar
reasonable costs of
examinations, credit
examinations, credit
regulation, including
assessment. Amounts
regulation, including
reviews, and enforcement.
reviews, and enforcement.
examinations and credit
collected to be placed
examinations and credit
Amounts collected are not
Amounts collected are not
reviews. Secretary of
in the Federal Housing
reviews. Assessments
to be construed to be
to be construed to be
HUD to levy similar
Enterprise Oversight
to be deposited in a
government or public funds
government or public
assessment to cover
Fund in Treasury, to be
fund in the Treasury for
or appropriated money.
funds or appropriated
HUD’s GSE-related
available without fiscal
the director’s use
(Sec. 106)
money. (Sec. 106)
regulatory functions.
year restrictions.
without fiscal year
Amounts collected to be
Retains requirement
limitation. Creates a
Assessments may include
Assessments may include
placed in a fund in
for appropriations, but
permanent
an amount in excess of
an amount in excess of
Treasury with separate
creates a permanent
appropriation. (Sec.
actual expenses, as deemed
actual expenses, as deemed
accounts for director and
appropriation. (Sec.
105)
necessary by the Director,
necessary by the Director,
HUD, to be available
101)
to maintain a working
to maintain a working
without fiscal year
capital fund. Collections in
capital fund. Collections
restrictions. Retains
excess of the amount the
in excess of the amount the
requirement for
Director deems necessary to
Director deems necessary
appropriations, but
maintain the working
to maintain the working
creates a permanent
capital fund shall be
capital fund shall be
appropriation. (Sec.
remitted annually to GSEs.
remitted annually to GSEs.
106)
(Sec. 106)
(Sec. 106)

CRS-21
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Financial operating
No provision.
The Secretary of HUD will
Director to submit plans
Director to submit
Director to submit plans
plan and forecasts
submit plans and forecasts
and forecasts to OMB
plans and forecasts to
and forecasts to OMB
to OMB before each fiscal
before each fiscal year,
OMB and Treasury
before each fiscal year,
year regarding HUD’s
and reports on operations
before each fiscal year,
and reports on
GSE oversight activities.
as soon as practicable
and reports on
operations as soon as
(Sec. 121)
after the ending of the
operations as soon as
practicable after the
fiscal year and each
practicable after the
ending of fiscal years
quarter thereof. The
ending of fiscal years
and quarters thereof.
Secretary of HUD will
and quarters thereof.
(Sec. 105)
submit similar plans and
The Secretary of HUD
reports to the director.
will submit similar
(Sec. 106)
plans and reports to the
director. (Sec. 101)

CRS-22
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Housing goals
HUD authority transferred
HUD Secretary retains
HUD Secretary retains
HUD Secretary retains
HUD Secretary retains
to FHESA, except for fair
authority to establish and
authority to enforce
authority to enforce
authority to enforce
housing responsibilities.
enforce housing goals.
housing goals. (Sec.
housing goals. (Sec.
housing goals. (Sec.
(Sec. 125)
Establishes a HUD Office
107)
103)
102)
of GSE Mission Oversight.
Director shall establish an
(Sec. 121) HUD Secretary
annual goal for home
to prepare an annual
purchases by low-income,
housing report on GSEs
first-time buyers who are
and housing goals. (Sec.
good credit risks but can’t
123)
cover a down payment or
closing costs. (Sec. 127)
Provides for improved
provision of mortgage credit
to low-income families and
underserved markets.
(Title IV)

CRS-23
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Prior approval
Director approval needed
Secretary of HUD’s prior
Secretary of HUD’s
GSE charter
New programs must be
authority for new
for new programs. New
approval authority
approval authority
compliance authority
approved by the
GSE programs
programs must not be in
retained, but consideration
retained — new
transferred from
Director, in consultation
and/or activities
conflict with the statutes or
of new and ongoing
activities may be
Secretary of HUD to
with the Secretary of
with the public interest.
programs to include
approved only if they are
Director. (Sec. 103)
HUD. New programs
(Sec. 122)
consultation with the
authorized by GSE
shall be approved unless
Director. New and
charters, can be
they are found to be
ongoing GSE programs
conducted in a safe and
inconsistent with safety
must be consistent with
sound manner, and are in
and soundness or not
their charters, not unsafe or
the public interest. (Sec.
authorized by GSE
unsound, and in the public
108)
charters. (Sec. 102)
interest. (Sec. 122)
Limits on non-
No provision.
No provision.
Secretary of HUD shall
No provision.
On a quarterly basis,
mission related
by regulation limit the
Director shall review
assets
amount of such assets a
and provide written
GSE may hold at any
comment to GSEs on
time. (Sec. 109)
the appropriateness and
quality of nonmortgage-
related assets held in
and outside the GSE’s
liquidity portfolio.
(Sec. 107)
Conforming loan
No provision.
No provision.
Loan limits to be raised
No provision.
No provision.
limits
or lowered each year
according to a housing
cost index maintained by
the Director. (Sec. 110)

CRS-24
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Public disclosure of
Regulated entities must
Director shall require each
Director shall require
No provision.
GSEs must register their
information
register at least one class of
GSE to obtain and disclose
GSEs to release
stock with the SEC and
capital stock with the SEC,
an annual credit rating, and
financial, business, and
make public disclosures
and maintain such
to publicly disclose interest
other information that
regarding interest rate
registration under the
rate and credit risk.
would be in the public
and credit risks and
Securities Exchange Act of
(Sec. 110)
interest. (Sec. 111)
their credit rating. (Sec.
1934. Enterprises must
112)
comply with SEC proxy and
insider transaction rules.
(Sec. 108)
Enterprises must also
disclose on a quarterly basis
the fair value of
shareholders’ equity.
(Sec. 109)
Reviews of GSE
Director shall require each
Director shall require each
Each GSE must be rated
No provision.
Each GSE must be rated
creditworthiness
GSE to obtain and disclose
GSE to obtain and disclose
biennially by two SEC-
biennially by two SEC-
an annual credit rating.
an annual credit rating.
recognized credit rating
recognized credit rating
(Sec 108)
(Sec 110)
organizations (Sec. 112)
organizations (Sec. 109)

CRS-25
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Risk-based capital
Director shall establish by
Director shall establish by
Director may specify the
No provision.
Director to review the
tests
regulation or order risk-
regulation or order risk-
assumptions about
adequacy of risk-based
based capital requirements
based capital requirements
interest rates, home
standards and, if
to ensure safe and sound
to ensure safety and
prices, and new business
needed, recommend
operation and the
soundness. (Sec. 109)
that are to be used by
that Congress make
maintenance of sufficient
GSEs in calculating
changes in the statutory
capital and reserves to
Director shall report to
capital requirements.
standards to better align
support risks that arise.
Congress annually on risk-
(Sec. 113)
capital with risk and
(Sec. 108)
based capital requirements
reflect evolving best
and tests. (Sec. 161)
practices in large
FHESA shall report
financial institutions.
quarterly on the levels of
Director may also
required capital and the
modify the current risk-
methods by which the levels
based capital level if the
are calculated.
level is inadequate to
(Sec. 161)
ensure safety and
soundness. (Sec. 110)
Requirements to
Regulated entities must
Director shall require
Director shall require
No provision.
GSEs must register their
enhance capital
register at least 1 class of
GSEs to issue subordinated
GSEs to issue
stock with the SEC and
strength, disclosure,
capital stock with the SEC,
debt, maintain appropriate
subordinated debt,
make public disclosures
and market
and make disclosures under
levels of liquidity, obtain
maintain appropriate
regarding interest rate
discipline
the Securities Exchange Act
and disclose an annual
levels of liquidity, obtain
and credit risks and
of 1934. (Sec. 108)
credit rating, and make
and disclose an annual
their credit rating. (Sec.
public disclosures
credit rating, and make
112)
regarding interest rate and
public disclosures
credit risk. (Sec. 110)
regarding interest rate
and credit risk. (Sec.
115)

CRS-26
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Minimum and
To be set by the director,
No provision.
May be adjusted (but not
No provision.
Director authorized to
critical capital
and may be raised above
set below statutory
issue regulations to
levels
minimum levels if director
minimums) by director.
ensure compliance with
determines that the benefits
(Sec. 114)
minimum and critical
outweigh adverse effects on
capital levels. (Sec.
the housing mission. (Sec.
111)
108)
Capital
Director may reclassify a
Director may reclassify a
Director may reclassify a
No provision.
Director may reclassify
classifications
GSE whose conduct could
GSE whose core capital is
GSE whose core capital
a GSE whose core
rapidly deplete core capital,
rapidly being depleted, or
is rapidly being depleted,
capital is rapidly being
or has caused a significant
which (after notice and
which (by the director’s
depleted, which (by the
loss to asset values, or
opportunity for a hearing)
written finding, after
director’s written
which is determined (after
is determined to be in an
notice and opportunity
finding, after notice and
notice and opportunity for a
unsafe or unsound
for a hearing) is in an
opportunity for a
hearing) to be in an unsafe
condition, or engaging in
unsafe or unsound
hearing) is in an unsafe
or unsound condition. (Sec.
an unsafe or unsound
condition, or engaging in
or unsound condition, or
141)
practice. (Sec. 141)
an unsafe or unsound
engaging in an unsafe or
practice. (Sec. 131)
unsound practice. (Sec.
131)

CRS-27
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Supervisory actions
Director must monitor
Director must monitor
Director must monitor
No provision.
Director must monitor
applicable to
GSE’s condition,
GSE’s condition,
GSE’s condition,
GSE’s condition,
undercapitalized
compliance with its capital
compliance with its capital
compliance with its
compliance with its
GSEs
restoration plan, and the
restoration plan, and the
capital restoration plan,
capital restoration plan,
efficacy of the plan. No
efficacy of the plan. No
and the efficacy of the
and the efficacy of the
growth in total assets is
growth in total assets is
plan. No growth in total
plan. No growth in total
permitted for an
permitted for an
assets is permitted for an
assets is permitted for
undercapitalized GSE,
undercapitalized GSE,
undercapitalized GSE,
an undercapitalized
unless the director has
unless the director has
unless the director has
GSE, unless the director
accepted the GSE’s capital
accepted the GSE’s capital
accepted the GSE’s
has accepted the GSE’s
restoration plan, an increase
restoration plan, an
capital restoration plan,
capital restoration plan,
in assets is consistent with
increase in assets is
an increase in assets is
an increase in assets is
the plan, and the ratio of
consistent with the plan,
consistent with the plan,
consistent with the plan,
tangible equity to assets is
and the ratio of tangible
and the ratio of tangible
and the ratio of tangible
increasing. No new
equity to assets is
equity to assets is
equity to assets is
activities or acquisitions
increasing. No new
increasing. No new
increasing. No new
permitted without the
products may be issued, or
products may be issued,
products may be issued,
Director’s prior approval.
acquisitions made, without
or acquisitions made,
or acquisitions made,
Actions that may be taken
the Director’s prior
without the Director’s
without the Director’s
under current law with
approval. Actions that
prior approval. Actions
prior approval. Actions
regard to significantly
may be taken under current
that may be taken under
that may be taken under
undercapitalized GSEs may
law with regard to
current law with regard
current law with regard
be taken with regard to
significantly
to significantly
to significantly
undercapitalized GSEs.
undercapitalized GSEs
undercapitalized GSEs
undercapitalized GSEs
(Sec. 142)
may be taken with regard
may be taken with regard
may be taken with
to undercapitalized GSEs.
to undercapitalized
regard to
(Sec. 142)
GSEs. (Sec. 132)
undercapitalized GSEs.
(Sec. 132)

CRS-28
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Supervisory actions
Supervisory actions that
Supervisory actions that
Supervisory actions that
No provision.
Supervisory actions that
applicable to
regulator may take under
regulator may take under
regulator may take under
regulator may take
significantly
current law must be taken,
current law must be taken,
current law must be
under current law must
undercapitalized
including one or more of the
including one or more of
taken, including one or
be taken, including one
GSEs
following: new election of
the following: new election
more of the following:
or more of the
directors, dismissal of
of directors, dismissal of
new election of directors,
following: new election
directors and/or executives,
directors and/or
dismissal of directors
of directors, dismissal
and hiring of qualified
executives, and hiring of
and/or executives, and
of directors and/or
executive officers. Without
qualified executive
hiring of qualified
executives, and hiring
written approval of director,
officers. Without written
executive officers.
of qualified executive
executives of a significantly
approval of director,
Without written approval
officers. Without
undercapitalized GSE may
executives of a
of director, executives of
written approval of
not receive bonuses or pay
significantly
a significantly
director, executives of a
raises. (Sec. 143)
undercapitalized GSE may
undercapitalized GSE
significantly
not receive bonuses or pay
may not receive bonuses
undercapitalized GSE
raises. (Sec. 143)
or pay raises. (Sec. 133)
may not receive
bonuses or pay raises.
(Sec. 133)

CRS-29
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Supervisory actions
Director may appoint (or
The director may appoint
After written notice to
No provision.
No provision.
applicable to
FHESA serve as) a receiver
an enhanced conservator to
Congress, the director
critically
or conservator for several
liquidate a critically
may appoint a receiver to
undercapitalized
causes related to financial
undercapitalized GSE and
liquidate a critically
GSEs (liquidation
difficulty or violation of law
wind up its affairs, in
undercapitalized GSE
authority)
or regulation. Director may
accordance with such
and wind up its affairs.
also appoint a limited-life
regulations as the Director
(Sec. 134)
enterprise to deal with the
may issue. (Sec. 144)
affairs of a GSE in default.
Congress may overrule the
appointment of a receiver
by passing a joint resolution
of disapproval within 45
days. (Sec. 144)
Restriction on
With certain exceptions, a
With certain exceptions, a
With certain exceptions,
No provision.
With certain exceptions,
capital distributions
GSE may not make a capital
GSE may not make a
a GSE may not make a
a GSE may not make a
distribution that would
capital distribution that
capital distribution that
capital distribution that
cause it to become
would cause it to become
would cause it to become
would cause it to
undercapitalized. (Sec. 141)
undercapitalized. (Sec.
undercapitalized. (Sec.
become
141)
131)
undercapitalized. (Sec.
131)

CRS-30
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Enforcement
Director may issue cease-
Director may issue cease-
Director may issue
Director may issue
Director may issue
authority (cease-
and-desist orders for unsafe
and-desist orders for
cease-and-desist orders
cease-and-desist
cease-and-desist orders
and-desist orders)
or unsound practices, or for
unsafe and unsound
for unsafe and unsound
orders, including
for unsafe and unsound
an unsatisfactory rating.
practices or violations of
practices or violations of
orders to take
practices or violations
(Sec. 151)
law. A less-than-
law. A less-than-
affirmative actions, to
of law. A less-than-
satisfactory examination
satisfactory examination
the same extent and
satisfactory examination
Temporary cease-and-desist
rating may be deemed an
rating may be deemed an
under the same
rating may be deemed
orders may be issued if GSE
unsafe and unsound
unsafe and unsound
procedures and
an unsafe and unsound
actions are likely to weaken
practice. Director may not
practice. (Sec. 151)
conditions as federal
practice. (Sec. 151)
its financial condition prior
enforce compliance with
bank regulators with
to the conclusion of a cease-
housing goals. (Sec. 151)
respect to insured
and-desist proceeding.
depository institutions.
(Sec. 152)
(Sec. 101)

CRS-31
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Enforcement
Temporary cease-and-desist
If an unsound or unsafe
If an unsound or unsafe
Director may issue
If an unsound or unsafe
authority
orders may be issued if GSE
practice appears likely to
practice appears likely to
temporary cease-and-
practice appears likely
(temporary cease-
actions are likely to weaken
cause insolvency or
cause insolvency or
desist orders, including
to cause insolvency or
and-desist
its financial condition prior
significant dissipation of
significant dissipation of
orders to take
significant dissipation
proceedings)
to the conclusion of a cease-
assets or earnings, director
assets or earnings,
affirmative action, to
of assets or earnings,
and-desist proceeding.
may issue temporary
director may issue
the same extent and
director may issue
(Sec. 152)
cease-and-desist orders,
temporary cease-and-
under the same
temporary cease-and-
including orders to take
desist orders, including
procedures and
desist orders, including
affirmative action to
orders to take affirmative
conditions as federal
orders to take
remedy the unsafe and
action to remedy the
bank regulators with
affirmative action to
unsound practice. Director
unsafe and unsound
respect to insured
remedy the unsafe and
may seek an injunction in
practice. Director may
depository institutions.
unsound practice.
federal court to enforce a
seek an injunction in
(Sec. 101)
Director may seek an
cease-and-desist order.
federal court to enforce a
injunction in federal
(Sec. 152)
cease-and-desist order.
court to enforce a cease-
(Sec. 152)
and-desist order. (Sec.
152)

CRS-32
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Removal and
After written notice and
After written notice and
After written notice and
Director may issue
After written notice and
prohibition
opportunity for a hearing,
opportunity for a hearing,
opportunity for a
suspension and
opportunity for a
authority
the director may suspend or
the director may suspend
hearing, the director may
removal orders to the
hearing, the director
remove “enterprise-
or remove “enterprise-
suspend or remove
same extent and under
may suspend or remove
affiliated parties” (defined
affiliated parties” (defined
“enterprise-affiliated
the same procedures
“enterprise-affiliated
below) who have 1) violated
below) who have 1)
parties” (defined below)
and conditions as
parties” (defined below)
a law or a cease-and-desist
violated a law or a cease-
who have 1) violated a
federal bank regulators
who have 1) violated a
or other written order, 2)
and-desist or other written
law or a cease-and-desist
with respect to insured
law or a cease-and-
engaged in an unsafe or
order, 2) engaged in an
or other written order, 2)
depository institutions.
desist or other written
unsound practice, or 3)
unsafe or unsound practice,
engaged in an unsafe or
(Sec. 101)
order, 2) engaged in an
breached fiduciary duty,
or 3) breached fiduciary
unsound practice, or 3)
unsafe or unsound
such that 1) the GSE is
duty, such that 1) the GSE
breached fiduciary duty,
practice, or 3) breached
likely to suffer loss or the
is likely to suffer loss or
such that 1) the GSE is
fiduciary duty, such that
enterprise affiliated party
the party gain, and 2) the
likely to suffer loss or
1) the GSE is likely to
gain, and 2) the unsafe or
unsafe or unsound practice
the party gain, and 2) the
suffer loss or the party
unsound practice
demonstrates continuing
unsafe or unsound
gain, and 2) the unsafe
demonstrates continuing
disregard for the safety and
practice demonstrates
or unsound practice
disregard for the safety and
soundness of the GSE.
continuing disregard for
demonstrates personal
soundness of the GSE. Also
(Sec. 153)
the safety and soundness
dishonesty or
provides for industry-wide
of the GSE. (Sec. 153)
continuing disregard for
suspensions under certain
the safety and
circumstances. (Sec. 153)
soundness of the GSE.
(Sec. 153)

CRS-33
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Who (besides the
“Enterprise-affiliated
“Enterprise-affiliated
“Enterprise-affiliated
No provision.
“Enterprise-affiliated
GSEs and their
parties” are defined as 1)
parties” are defined as 1)
parties” are defined as 1)
parties” are defined as
officers and
directors, officers, or
directors, officers, or
directors, officers, or
1) directors, officers, or
employees) is
employees of a GSE, 2)
employees of a GSE, 2)
employees of a GSE, 2)
employees of a GSE, 2)
subject to cease-
shareholders, joint venture
shareholders, joint venture
shareholders, joint
shareholders, joint
and-desist orders or
partners, or consultants, 3)
partners, or consultants, or
venture partners, or
venture partners, or
removal and
independent contractors
3) independent contractors
consultants, or 3)
consultants, or 3)
suspension
who knowingly or
who knowingly or
independent contractors
independent contractors
authority?
recklessly violate law,
recklessly violate law,
who knowingly or
who knowingly or
breach fiduciary duty, or
breach fiduciary duty, or
recklessly violate law,
recklessly violate law,
participate in an unsafe or
participate in an unsafe or
breach fiduciary duty, or
breach fiduciary duty,
unsound practice (where
unsound practice.
participate in an unsafe
or participate in an
such actions are likely to
(Sec. 111)
or unsound practice.
unsafe or unsound
cause significant losses in
(Sec. 116)
practice. (Sec. 114)
the GSE, or (4) non-profits
that receive their principal
funding on an ongoing basis
from a GSE.
(Sec. 2)

CRS-34
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Civil money
Three tiers of fines: 1)
Three tiers of fines: 1)
Three tiers of fines: 1)
Director may impose
Three tiers of fines: 1)
penalties
$10,000 per day for
$10,000 per day for
$10,000 per day for
civil fines to the same
$10,000 per day for
violations of orders, etc., 2)
violations of orders, etc.,
violations of orders, etc.,
extent and under the
violations of orders,
$50,000 per day for a
2) $50,000 per day for a
2) $50,000 per day for a
same procedures and
etc., 2) $50,000 per day
pattern of misconduct or
pattern of misconduct or
pattern of misconduct or
conditions as federal
for a pattern of
breach of fiduciary duty
breach of fiduciary duty
breach of fiduciary duty
bank regulators with
misconduct or breach of
with financial gain to the
with financial gain to the
with financial gain to the
respect to insured
fiduciary duty with
individual, and 3) up to a
individual, and 3) up to a
individual, and 3) up to a
depository institutions.
financial gain to the
maximum of $2 million for
maximum of $2 million for
maximum of $2 million
(Sec. 101)
individual, and 3) up to
knowingly engaging in
knowingly engaging in
for knowingly engaging
a maximum of $2
violations, breaches of
violations, breaches of
in violations, breaches of
million for knowingly
fiduciary duties, or unsafe
fiduciary duties, or unsafe
fiduciary duties, or
engaging in violations,
or unsound practices that
or unsound practices that
unsafe or unsound
breaches of fiduciary
cause substantial losses to a
cause substantial losses to
practices that cause
duties, or unsafe or
GSE. (Sec. 155)
a GSE. (Sec. 155)
substantial losses to a
unsound practices that
GSE. (Sec. 155)
cause substantial losses
to a GSE. (Sec. 155)
Criminal penalties
Anyone who participates
Anyone who participates
Anyone who participates
No provision.
Anyone who
directly or indirectly in the
directly or indirectly in the
directly or indirectly in
participates directly or
affairs of a GSE while
affairs of a GSE while
the affairs of a GSE
indirectly in the affairs
under suspension or order
under suspension or order
while under suspension
of a GSE while under
of removal shall be liable
of removal shall be liable
or order of removal shall
suspension or order of
for a fine of up to $1
for a fine of up to $1
be liable for a fine of up
removal shall be liable
million, or five years
million, or five years
to $1 million, or five
for a fine of up to $1
imprisonment. (Sec. 156)
imprisonment. (Sec. 156)
years imprisonment.
million, or five years
(Sec. 156)
imprisonment. (Sec.
156)

CRS-35
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Federal Financial
No provision.
No provision.
No provision.
Director to become
Director to become
Institutions
member of FFIEC.
member of FFIEC.
Examination
(Sec. 106)
(Sec. 102)
Council (FFIEC)
GSE directors
Strikes provision in current
Strikes provision in current
No provision.
No provision.
No provision.
law under which 5 members
law by which 5 members
of GSE boards of directors
of GSE boards of directors
are appointed by the
are appointed by the
President.
President.
(Sec. 172)
(Sec. 171)
Federal Home Loan
FHLBs come under the
No provision.
No provision.
Merges OFHEO and
Requires FHLBs to
Banks
regulation of FHESA,
Federal Housing
register their stock with
which assumes the duties of
Finance Board (FHFB
the SEC and comply
the Federal Housing
— currently overseer
with certain SEC
Finance Board (FHFB).
of the Federal Home
reporting requirements.
(Sec. 203)
Loan Banks) into
(Sec. 112) Calls for a
OHFO, a bureau in the
study of merging FHFB
Creates a Federal Home
Department of the
with OFEHS. (Sec.
Loan Bank Finance
Treasury. (Sec. 101)
113)
Corporation to act as a
fiscal agent and issue and
service the consolidated
debt of the FHLBs.
(Replaces the Office of
Finance.)
(Sec. 204)

CRS-36
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Reports and studies
1. Director and bank
1. Treasury and bank
1. Treasury and bank
No studies or reports
1. Director shall report
for Congress
regulators to report on
regulators to report on
regulators to report on
called for.
biennially to Congress
various matters related to
holdings of GSE securities
holdings of GSE
on nonmortgage assets
holdings of GSE securities
by insured banks, and
securities by insured
held by GSEs and GSE
by insured depository
systemic risk implications.
banks, and systemic risk
compliance with the
institutions.
implications.
Basel Committee’s
2. Director to report on
Sound Practices for
2. Director (in consultation
GSEs’ investment
2. Director to report on
Managing Liquidity.
with GAO)to report on GSE
portfolios, risk
GSEs’ investment
(Sec. 107)
portfolio operations, risk
management practices, and
portfolios, risk
management, and mission.
related safety and
management practices,
soundness implications.
and related safety and
3. Director to report on the
soundness implications.
growth of GSE debt , and
3. Treasury to report on
analyze whether debt levels
growth of GSE debt and
3. Treasury to report on
ought to be limited if the
possible effects of limits
growth of GSE debt and
GSE is not operating in a
on GSE debt issuance.
possible effects of limits
safe and sound manner or
on GSE debt issuance.
fails to maintain a certain
4. Director to report
debt rating.
annually to Congress on
4. Treasury to report on
risk-based capital
GSEs line of credit with
4. Director to report
standards for GSEs,
the Treasury: its
quarterly on risk-based
including minimum and
purposes and the
capital standards and the
critical capital levels.
possible effects of
method by which those
eliminating it.
standards are determined.
(Sec. 161)
5. Director to report
5. GAO to report annually
annually on risk-based
on the allocation of
capital standards and
FHESA’s resources and the
minimum and critical
level of assessments
capital levels.
collected by the agency.

CRS-37
S. 1508
House Fin. Serv.
Provision
(as passed by the
H.R. 2575
H.R. 2803
S. 1656
Manager’s Amendment
Banking Committee)
Transition from
Various provisions dealing
Various provisions dealing
Various provisions
Various provisions
Various provisions
OFHEO to new
with abolition of OFHEO
with abolition of OFHEO,
dealing with abolition of
dealing with abolition
dealing with abolition
agency
and the FHFB, continuation
continuation of certain
OFHEO, continuation of
of OFHEO,
of OFHEO,
of certain regulations,
regulations, transfer of
certain regulations,
continuation of certain
continuation of certain
transfer of property and
property and facilities,
transfer of property and
regulations, transfer of
regulations and
facilities, employee rights
employee rights and
facilities, employee
property and facilities,
authorities, transfer of
and benefits, etc. (Title III)
benefits, etc. (Title II,
rights and benefits, etc.
employee rights and
property and facilities,
Secs. 201-204)
(Title II, Secs. 201-204)
benefits, etc. (Title II,
employee rights and
Secs. 201-204)
benefits, etc. (Title II,
Secs. 201-204)
Effective date
One year from the date of
One year post-enactment.
One year post-
Six months post-
One year post-
enactment. (Sec. 173)
(Sec. 173)
enactment.
enactment.
enactment. (Sec. 162)
(Sec. 172)
(Sec. 107)