Fannie Mae 2004 Annual Report Download - page 211

• Board of Directors and Executive Roles
We believe that we remediated this material weakness prior to the date of this filing. We have made
significant changes to the Board of Directors since our receipt of OFHEO’s interim report in September
2004. These changes include:
• amending our bylaws to separate the functions of the Chief Executive Officer and Chairman of the
Board;
• appointing Stephen B. Ashley as non-executive Chairman of the Board;
• creating a Risk Policy and Capital Committee of the Board in February 2005, which replaced the role
of the former Assets & Liabilities Policy Committee in assisting the Board in overseeing capital
management and risk management;
• creating a Technology and Operations Committee of the Board with responsibility for assisting the
Board in overseeing these functions;
• re-designating a new Compliance Committee of the Board, composed entirely of independent directors,
in October 2004, that now has responsibility for monitoring compliance with our May 2006 consent
order with OFHEO. In November 2005, the Board of Directors commissioned the Compliance
Committee as a permanent committee of the Board with responsibility for providing legal and
regulatory oversight;
• revising the charters of six standing committees of our Board of Directors (Audit Committee,
Nominating and Corporate Governance Committee, Compensation Committee, Compliance Committee,
Risk Policy and Capital Committee, and Housing and Community Finance Committee);
• changing the composition of the Board by eliminating two of the three management Board seats;
• adding six new Board members who enhance the substantive business operations, accounting and
finance knowledge of the Board; and
• naming a new Chairman of the Audit Committee and appointing three other new members to the Audit
Committee.
In addition, the Board of Directors appointed a new Chief Executive Officer.
•Enterprise-Wide Risk Oversight
We have established an enterprise-wide risk organization with oversight of credit risk, market risk and
operational risk, as well as model review. In May 2006, we announced the hiring of a Chief Risk Officer,
and new senior officers responsible for credit risk oversight and operational risk oversight reporting to the
new Chief Risk Officer. In 2006, we also hired a senior officer responsible for market risk oversight,
capital methodology and model review. We have developed and communicated corporate-wide risk
policies and are enhancing our business unit risk management processes. We have implemented a new
organizational risk structure that includes risk management personnel within each business unit. Those
individuals report to business unit leadership and have responsibility for implementing the corporate-wide
risk policies in their respective business units. We have enhanced Board monitoring and communication
regarding credit risk and market risk by establishing the Risk Policy and Capital Committee of the Board
of Directors. The Chief Risk Officer reports independently to the Risk Policy and Capital Committee, and
also reports directly to the Chief Executive Officer.
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