03.02.03

3.2.2003: Meldung: Fannie Mae Announces New Corporate Governance Guidelines

In its continuing effort to be best-in-class in corporate governance and transparency, Fannie Mae"s Chairman and Chief Executive Officer, Franklin D. Raines today announced that the company"s Board of Directors has adopted new principles on corporate governance, which will be available Monday, February 3, through a new Corporate Governance section of the company"s Web site,
http://www.fanniemae.com.

In addition, Raines said that Standard & Poor"s (S&P) validated the company"s consistently strong corporate governance efforts through its favorable score, which S&P announced yesterday.
Speaking at the Women in Housing Finance monthly luncheon, Raines today said that as a glass-box company, Fannie Mae must continually examine its corporate governance practices to ensure that they remain best-in-class.

"Looking at the best practices in the market, including those offered by the New York Stock Exchange, The Business Roundtable, The Conference Board, and others, Fannie Mae"s Board voted to approve and adopt Fannie Mae"s corporate governance guidelines to both strengthen and codify the company"s best-in-class practices," Raines said.
He said that there are two key principles embedded in Fannie Mae"s corporate governance policy. "First, the roles of the board and management are clear and distinct. That is, the Board picks the CEO - the CEO does not pick the Board. The CEO is not a free agent or an independent player. He is an employee of Fannie Mae. And, the second principle is that, to hold the CEO accountable, the Board has maximum independence and minimum conflicts of interest," Raines said.
Some of the other specific principles that Raines outlined included board independence from management. He said that 13 of the current 17 board members are independent from management. By independent, Raines explained that these directors have no material relationships with the company that might impair their independent judgement.

In addition, he said that the Board"s Audit Committee, Compensation Committee, Nominating and Corporate Governance Committees are comprised entirely of independent directors. Raines noted that the Chairman of the Nominating and Corporate Governance Committee will serve as the presiding director of non-management director meetings.
The corporate governance section of the company"s website will include Fannie Mae"s corporate governance guidelines, corporate bylaws, board committee charters and codes of ethics for employees and directors. Raines also noted that the Board recently adopted stronger Codes of Conduct.
For an independent validation of the company"s corporate governance and transparency, Raines said that the company asked S&P for a corporate governance review and score.
"Fannie Mae is first company in the U.S. that S&P has assigned a corporate governance score," Raines said. "We are pleased to say that the S&P report assigned Fannie Mae a corporate governance score of 9.0 on a 10-point scale - a score it said reflected "governance practices that are consistently strong or very strong across each of (the) areas of analysis."

Raines said that more than most companies, Fannie Mae operates in a fishbowl thanks to its unique corporate status, its size and influence in the housing market, its public interest mission and the scope of its activity in the fixed-income markets.
S&P based its analysis of Fannie Mae on the company"s performance in each of four major areas: Ownership Structure and External Stakeholder Influence; Investor Rights and Relations; Transparency and Disclosure; and, Board Structure and Process.
Raines highlighted some of the S&P report:
· Fannie Mae is "among the most tightly regulated financial companies in the world." Fannie Mae"s regulatory oversight and voluntary initiatives provide "disclosure about Fannie Mae"s financial health that is unavailable from other, similar financial institutions."
· Fannie Mae provides "not just the typical financial statements and notes, but also a reviews of its derivative and hedging activities, its off-balance sheet risk, and an overview of its outstanding mortgage portfolio."
· Fannie Mae "provides strong disclosure of its special purpose vehicles and risk management techniques," it said, which are "arguably among the most important disclosures the company makes given its business."
· Fannie Mae"s board "combines a good mix of new and longer-serving directors, directors of high caliber and with a diversity of skills and a strong voice of independence and engagement."
· The company"s "board structure meets or exceeds the latest rules on board composition proposed by the New York Stock Exchange, and has for some time." The report also states that our board "has a clear and substantial majority of independent, non-executive directors and independent board committees."
· The Fannie Mae board appears to be an effective leader of the company and "monitor of management." And, directors appear to be engaged and show a desire to demonstrate leadership in board effectiveness and governance. And, Fannie Mae"s audit committee demonstrates a commitment to the independence of the audit process. Its members are actively engaged with both the internal audit team and the outside members.

"The first thing we do is place a premium on openness and transparency," Raines added. "Our standard is to be a model "glass box" company. We listen to investors, shareholders, stakeholders, policymakers and the media. We respond to their questions and try to meet their information needs. And as the record shows, we are always willing to do more to keep our disclosures and corporate governance at the cutting-edge of best practices."
Raines said Fannie Mae is continuously enhancing information for its debt, equity and MBS investors making it even more transparent and easy to read.
He also said that the company has been working with SEC, Treasury, and OFHEO on a task force to determine whether market participants would value more disclosure regarding loans in MBS pools, and whether enhanced disclosure could be accomplished without impairing the unmatched liquidity of this market.
Raines said that the company looks forward to hearing what the task force learned. He said that Fannie Mae expects to announce improvements to its MBS disclosures and to have those new disclosures out into the marketplace as soon as possible.

Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation"s largest source of financing for home mortgages.
Fannie Mae is working to shrink the nation"s "homeownership gaps" through a $2 trillion "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade.
Since 1968, Fannie Mae has provided $4.5 trillion of mortgage financing for more than 49 million families. More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.

Style Usage: Fannie Mae"s Board of Directors has authorized the company to operate as "Fannie Mae," and the company"s stock is now listed on the NYSE as "Fannie Mae." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."


Contact:
Fannie Mae
Janice Daue, 202/752-2131
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