,i #aafth ,,congress #b;d ,session ,h4 ,r4 #hhgb ,,in ,,the ,,house ,,of ,,representatives ,december #d1 #bjbj,mr4 ,hollingsworth 7for himself and ,mr4 ,heck7 introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to amend the ,federal ,home ,loan ,bank ,act to enable captive insurance companies to apply for membership in the ,federal ,home ,loan ,bank ,system1 to add additional membership criteria for captive insurance companies1 to require a study on ,federal ,home ,loan ,bank membership1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,transparency in ,federal ,home ,loan ,bank ,membership ,act of #bjbj4 #b4 ,definitions ,section #b of the ,federal ,home ,loan ,bank ,act 7#ab ,u4,s4,c4 #adbb7 is amended by adding at the end the following3 7#ac7 ,captive insurance company ,the term captive insurance company means an insurance company whose primary business is the insurance of its affiliates4 7#ad7 ,insurance company ,the term insurance company means an entity that holds an insurance license or charter under the laws of a ,state4 7#ae7 ,parent company ,the term parent company means the ultimate parent company4 4 #c4 ,captive insurance company eligibility for membership 7a7 ,in general ,section #d7;a7 of the ,federal ,home ,loan ,bank ,act 7#ab ,u4,s4,c4 #adbd7;a77 is amended by adding at the end the following3 7#f7 ,eligible captive insurance companies 7,a7 ,in general ,a captive insurance company shall be eligible to become a member of a ,federal ,home ,loan ,bank only if the parent company of the captive insurance company meets the following requirements3 7i7 ,mission alignment standards 7,i7 ,housing investment ,at least #ea percent of the total assets of the parent company are invested in residential mortgage loans4 7,,ii7 ,form of investments ,at least #fj percent of the total assets of the parent company are held in real estate assets1 cash and cash equivalents1 and government securities 7as such terms are used under section #hef7;c77#d77;,a7 of the ,internal ,revenue ,code of #aihf74 7ii7 ,capital standards ,such capital standards as the ,director determines appropriate1 by rule1 which shall be as close as practicable to those capital standards applicable to insured depository institutions 7as defined under section #c of the ,federal ,deposit ,insurance ,act74 7,b7 ,ongoing membership 7i7 ,reporting requirement ,every #e years after becoming a member of a ,federal ,home ,loan ,bank1 a captive insurance company shall submit a report1 prepared by a third-party auditor1 to the ,director containing information on compliance by the parent company with the requirements described under subparagraph 7,a74 7ii7 ,parent company requirements ,a parent company of a captive insurance company that is a member of a ,federal ,home ,loan ,bank shall-- 7,i7 maintain the mission alignment standards described under subparagraph 7,a77i72 7,,ii7 maintain the capital standards described under subparagraph 7,a77ii72 7,,iii7 be deemed a regulated entity under section #acad of the ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7#ab ,u4,s4,c4 #dead72 and 7,,iv7 be subject to such additional reporting requirements as the ,director determines appropriate1 by rule4 7iii7 ,failure to meet mission alignment standards requirement ,if the ,director determines that a parent company no longer meets the mission alignment standards described under subparagraph 7,a77i71 the ,director shall require the parent company to file quarterly reports with the ,director for a #a-year period1 showing how the parent company is seeking to comply with such mission alignment standards4 7iv7 ,report on parent company compliance with capital standards 7,i7 ,in general ,each captive insurance company that is a member of a ,federal ,home ,loan ,bank shall issue a quarterly report to the ,bank containing information on the compliance1 by the parent company of the captive insurance company1 with the capital standards described under subparagraph 7,a77ii74 7,,ii7 ,report on non-compliance ,if a ,federal ,home ,loan ,bank receiving reports described under subclause 7,i7 determines that a parent company has failed to meet the capital standards described under subparagraph 7,a77ii7 for #b consecutive quarters1 the ,bank shall notify the ,director of such failure4 7v7 ,failure to meet capital standards requirement ,if the ,director determines that a parent company no longer meets the capital standards described under subparagraph 7,a77ii71 the ,director shall require the parent company to file a capital restoration plan with the ,director and the ,federal ,home ,loan ,bank with respect to which the parent company's captive insurance company is a member4 7vi7 ,termination of membership ,a captive insurance company's membership of a ,federal ,home ,loan ,bank shall be terminated1 in accordance with section #f7;d77#b7 of the ,federal ,home ,loan ,bank ,act 7#ab ,u4,s4,c4 #adbf7;d77#b771 if-- 7,i7 the parent company of the captive insurance company does not submit a capital restoration plan required under clause 7v7 that is substantially in compliance with section #acfi;,c of the ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7#ab ,u4,s4,c4 #dfbb7 within the applicable period2 7,,ii7 the ,director does not approve such a capital restoration plan required under clause 7v72 7,,iii7 the ,director determines that the parent company has failed to comply with such a capital restoration plan2 or 7,,iv7 with respect to a parent company that the ,director has determined no longer meets the mission alignment standards described under subparagraph 7,a77i71 the parent company has not returned to compliance with such standards before the end of the #a-year period described under clause 7iii74 7vii7 ,reapplication ,a captive insurance company whose membership in a ,federal ,home ,loan ,bank is terminated under clause 7vi7 may not reapply for membership in a ,federal ,home ,loan ,bank until the end of the #e-year period beginning on the date of such termination4 7,c7 ,parent company support 7i7 ,in general ,the ,director shall require the parent company of the captive insurance company1 in the event that the captive insurance company defaults on any amounts owed to a ,federal ,home ,loan ,bank1 to pay the ,bank the amount of any such default4 7ii7 ,enforcement powers ,for purposes of enforcing this subparagraph1 a parent company shall be deemed a regulated entity under sections #acga1 #acgb1 and #acgf of the ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7#ab ,u4,s4,c4 #dfca1 #dfcb1 and #dfcf74 7,d7 ,clarification of priority of secured interests ,any security interest granted to a ,federal ,home ,loan ,bank by any captive insurance company1 or by its parent company or any affiliate company on its behalf1 shall be entitled to priority over the claims and rights of any party 7including any receiver1 conservator1 trustee1 or similar party having rights of a lien creditor7 other than claims and rights that-- 7i7 would be entitled to priority under otherwise applicable law2 and 7ii7 are held by actual bona fide purchasers for value or by actual secured parties that are secured by actual perfected security interests4 4 7b7 ,rulemaking ,not later than the end of the #a-year period beginning on the date of enactment of this ,act1 the ,director of the ,federal ,housing ,finance ,agency shall issue the capital standards and reporting requirements rules described under subparagraphs 7,a77ii7 and 7,b77ii77,,iv7 of section #d7;a77#f7 of the ,federal ,home ,loan ,bank ,act4 7c7 ,applicability ,section #d7;a77#f7 of the ,federal ,home ,loan ,bank ,act1 as added by subsection 7a71 shall take effect with respect to a captive insurance company on the effective date of the rules required under subsection 7b74 7d7 ,captive insurance company eligibility transition period ,a captive insurance company that has1 or will have1 the company's membership in a ,federal ,home ,loan ,bank terminated due solely to the change in the treatment of captive insurance companies under the final rule of the ,federal ,housing ,finance ,agency titled ,members of ,federal ,home ,loan ,banks 7#ha ,fed4 ,reg4 #cbdf2 published ,january #bj1 #bjaf7 may continue membership or have membership restored1 as applicable1 in the same ,federal ,home ,loan ,bank during the period beginning on the date of enactment of this ,act and ending on the day the ,director issues the rules required under subsection 7b71 if-- 7#a7 the ,federal ,home ,loan ,bank determines1 including based on information submitted by the captive insurance company1 that-- 7,a7 the affiliate insured by the captive insurance company makes1 owns1 or acquires residential mortgage loans2 and 7,b7 the captive insurance company will comply with the membership eligibility requirements described in paragraphs 7a71 7b71 and 7c7 of section #abfc4f of title #ab1 ,code of ,federal ,regulations1 during such period2 and 7#b7 the captive insurance company continues to be owned1 or upon restoration of membership is owned and continues to be owned1 including direct ownership by a controlling entity or indirect ownership through one or more holding companies1 by the same entity that owned the captive insurance company on the date of enactment of this subsection4 #d4 ,study on impact of expansion of membership 7a7 ,study ,the ,director of the ,federal ,housing ,finance ,agency shall conduct a study on the impact of the expansion of the ,federal ,home ,loan ,bank ,system to additional types of entities involved in the housing finance system4 ,the study shall consider-- 7#a7 how liquidity provided through the ,federal ,home ,loan ,bank ,system could be increased in a manner that is consistent with its mission2 7#b7 what initial and ongoing capital and reporting requirements for membership could be used to minimize risk to the ,federal ,home ,loan ,bank ,system2 7#c7 how the ,federal ,housing ,finance ,agency could use its oversight and authority to ensure that expanded membership would not pose excessive risk to the ,federal ,home ,loan ,bank ,system2 7#d7 mitigants and transaction structures to address risk of an insolvency proceeding affecting the parent of a captive insurance company member2 and 7#e7 other topics relevant to developing a framework for membership that promotes the mission of the ,federal ,home ,loan ,bank ,system4 7b7 ,report ,not later than one year after the date of enactment of this ,act1 the ,director shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives a report on the study required under subsection 7a71 including all findings and determinations made in carrying out the study4