Fannie, Freddie Urged to Split Top Jobs

Separating the CEO and chairman positions is one of several changes proposed for the mortgage finance companies.

The federal agency that oversees mortgage finance companies Fannie Mae and Freddie Mac has recommended a number of corporate governance changes to “address current weaknesses and help reduce the potential for future corporate misconduct.”

“As government-sponsored enterprises, Fannie Mae and Freddie Mac should be held to the highest standards of business conduct and corporate governance, and that is why I am proposing to implement stronger corporate governance requirements,” said Armando Falcon, director of the Office of Federal Housing Enterprise Oversight, in a statement.

Among the changes proposed by the OFHEO for Fannie Mae and Freddie Mac:

  • separate the positions of chief executive officer and chairman of the board
  • establish a term limit of 10 years and an age limit of 72 for board members
  • require audit partner rotation every five years and auditor rotation every 10 years
  • require “appropriate and reasonable” compensation that looks to legal compliance and organizational stability and not just to earnings
  • require a review of codes of conduct no less often than every three years.

The proposed rule will be open for public comment for 60 days.

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