Fannie Mae, OFHEO In Supervisory Agreement
Fannie Mae and its federal regulator, the Office of Federal Housing Enterprise Oversight, announced a new supervisory agreement for the secondary mortgage market giant last week that will require the company to split its chairman and CEO positions. The agreement also calls for Fannie Mae to set up new policies to address faulty accounting and create a new ombudsman's office to hear complaints from company employees.
The new Office of Compliance and Ethics will review internal complaints and the company's general counsel will report suspected misconduct directly to the board. The steps come on top of recent supervisory requirements to boost capital by 30% and as the accounting scandal surrounding the company continues.
Among other things, OFHEO found last year that Fannie Mae had misrepresented its financial statements to qualify dozens of employees for higher annual bonuses.
The disclosures resulted in the dismissal of Fannie Mae's longtime chairman and CEO Franklin Raines, and the company's chief financial officer, Timothy Howard.