secondary reserve

.....................................................................

(Original Signature of Member)

114TH CONGRESS 1ST SESSION H. R. ll

To amend the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish a secondary reserve fund for a housing enter-prise under conservatorship to protect taxpayers against loss in the event of a housing downturn, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

Mrs. BLACKBURN introduced the following bill; which was referred to the Committee on llllllllllllll

A BILL To amend the Federal Housing Enterprises Financial Safety

and Soundness Act of 1992 to establish a secondary reserve fund for a housing enterprise under conservator-ship to protect taxpayers against loss in the event of a housing downturn, and for other purposes.

Be it enacted by the Senate and House of Representa-1

tives of the United States of America in Congress assembled, 2

SECTION 1. SHORT TITLE. 3

This Act may be cited as the Enterprise Secondary 4

Reserve Taxpayer Protection and Government Account-5

ability Act of 2015. 6

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2 SEC. 2. SECONDARY RESERVE. 1

Section 1362 of the Federal Housing Enterprises Fi-2

nancial Safety and Soundness Act of 1992 (12 U.S.C. 3

4612) is amended 4

(1) by striking the section designation and 5

heading and inserting the following: 6

SEC. 1362. MINIMUM CAPITAL LEVELS AND SECONDARY 7

RESERVE.; 8

(2) by redesignating subsections (e) and (f) as 9

subsections (f) and (g), respectively; and 10

(3) by inserting after subsection (d) the fol-11

lowing new subsection: 12

(e) SECONDARY RESERVE. 13

(1) ESTABLISHMENT.Notwithstanding any 14

other provision of law, rule, regulation, order, or 15

agreement, the Director shall, by regulation, estab-16

lish for any enterprise operating in conservatorship 17

pursuant to section 1367 a secondary reserve fund 18

and shall deposit in such fund from any revenues of 19

the enterprise an amount equal to the amounts enu-20

merated under subsection (a) for the enterprise. 21

(2) MAINTENANCE.Amounts in the sec-22

ondary reserve fund shall be held in escrow by the 23

enterprise until 24

(A) the Director uses such amounts pur-25

suant to paragraph (3); or 26



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3

(B) the Director abolishes the secondary 1

reserve fund pursuant to paragraph (4). 2

(3) AVAILABILITY OF AMOUNTS.If the Di-3

rector determines, in accordance with regulations 4

issued under paragraph (5), that losses of an enter-5

prise operating in conservatorship pursuant to sec-6

tion 1367 will exceed amounts available for the en-7

terprise under subsections (a), (c), (d), or (f), the 8

Director shall make a determination, in accordance 9

with such regulation, whether to use funds held in 10

the secondary reserve for the enterprise. 11

(4) ABOLISHMENT.Upon the dissolution of 12

the conservatorship of an enterprise, the Director 13

shall abolish any secondary reserve established under 14

paragraph (1) for the enterprise and amounts re-15

maining in such reserve upon such abolishment shall 16

revert to meet capital requirements under sub-17

sections (a), (c), (d), and (f) and then to earnings 18

of the enterprise. 19

(5) REGULATIONS.The Director shall issue 20

regulations establishing 21

(A) standards and procedures for the es-22

tablishment of a secondary reserve under para-23

graph (1); 24



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4

(B) standards and procedures that the 1

Director will use to make the determinations 2

under paragraph (3); and 3

(C) procedures for abolishment of a sec-4

ondary reserve under paragraph (4). 5

(6) TREATMENT OF SECONDARY RESERVE. 6

Any secondary reserve established under this Act for 7

an enterprise shall not be considered capital, a cap-8

ital reserve, or otherwise an asset of the enterprise, 9

other than as part of a capital restoration plan for 10

the enterprise approved under section 1369C, during 11

the pendency of a conservatorship for the enter-12

prise.. 13

SEC. 3. EFFECTIVE DATE. 14

The amendments made by section 2 of this Act shall 15

take effect upon the expiration of the 90-day period begin-16

ning on the date of the enactment of this Act and the 17

Director of the Federal Housing Finance Agency shall 18

issue the regulations required under section 1362(e)(5) of 19

the Federal Housing Enterprises Financial Safety and 20

Soundness Act of 1992, added by the amendment made 21

by such section 2, before the expiration of such period. 22



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F:\M14\BLACKB\BLACKB_015.XML 3/25/2015 16:23 01/13/2015 12:08 1141-0113-482811 588931|9 [Discussion Draft] (Original Signature of Member) [DISCUSSION DRAFT] I 114th CONGRESS 1st Session H. R. __ IN THE HOUSE OF REPRESENTATIVES Mrs. Blackburn introduced the following bill; which was referred to the Committee on ______________ A BILL To amend the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish a secondary reserve fund for a housing enterprise under conservatorship to protect taxpayers against loss in the event of a housing downturn, and for other purposes. 1. Short title This Act may be cited as the Enterprise Secondary Reserve Taxpayer Protection and Government Accountability Act of 2015. 2. Secondary reserve Section 1362 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4612) is amended (1) by striking the section designation and heading and inserting the following: 1362. Minimum capital levels and secondary reserve ; (2) by redesignating subsections (e) and (f) as subsections (f) and (g), respectively; and (3) by inserting after subsection (d) the following new subsection: (e) Secondary reserve (1) Establishment Notwithstanding any other provision of law, rule, regulation, order, or agreement, the Director shall, by regulation, establish for any enterprise operating in conservatorship pursuant to section 1367 a secondary reserve fund and shall deposit in such fund from any revenues of the enterprise an amount equal to the amounts enumerated under subsection (a) for the enterprise. (2) Maintenance Amounts in the secondary reserve fund shall be held in escrow by the enterprise until (A) the Director uses such amounts pursuant to paragraph (3); or (B) the Director abolishes the secondary reserve fund pursuant to paragraph (4). (3) Availability of amounts If the Director determines, in accordance with regulations issued under paragraph (5), that losses of an enterprise operating in conservatorship pursuant to section 1367 will exceed amounts available for the enterprise under subsections (a), (c), (d), or (f), the Director shall make a determination, in accordance with such regulation, whether to use funds held in the secondary reserve for the enterprise. (4) Abolishment Upon the dissolution of the conservatorship of an enterprise, the Director shall abolish any secondary reserve established under paragraph (1) for the enterprise and amounts remaining in such reserve upon such abolishment shall revert to meet capital requirements under subsections (a), (c), (d), and (f) and then to earnings of the enterprise. (5) Regulations The Director shall issue regulations establishing (A) standards and procedures for the establishment of a secondary reserve under paragraph (1); (B) standards and procedures that the Director will use to make the determinations under paragraph (3); and (C) procedures for abolishment of a secondary reserve under paragraph (4). (6) Treatment of secondary reserve Any secondary reserve established under this Act for an enterprise shall not be considered capital, a capital reserve, or otherwise an asset of the enterprise, other than as part of a capital restoration plan for the enterprise approved under section 1369C, during the pendency of a conservatorship for the enterprise. . 3. Effective date The amendments made by section 2 of this Act shall take effect upon the expiration of the 90-day period beginning on the date of the enactment of this Act and the Director of the Federal Housing Finance Agency shall issue the regulations required under section 1362(e)(5) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, added by the amendment made by such section 2, before the expiration of such period.

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