Fannie Mae 2006 Annual Report Download - page 5
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Please find page 5 of the 2006 Fannie Mae annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.F M 2006 A R
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As we continue to strengthen
our company, we are focused on
working with our partners to help
the housing and mortgage markets
weather one of the toughest
corrections in recent history.
at said, we are nearly caught up and current with our
financial statements. Providing you with the full, current
information you need to gauge the performance and
value of our company is one of our most fundamental
obligations to our shareholders. We have taken another
step toward reestablishing the routines you should expect
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registrant by mailing this letter, along with our 2006 Form
10-K and a solicitation of shareholders’ proxy and other
proxy materials, in preparation for our annual shareholders’
meeting this December 14 in Washington, DC.
2005-2006: Rebuilding Fannie Mae
Let me pick up this story from the end of 2004, when I
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Levin became interim Chief Financial Officer. At the
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us to restate past earnings. Our safety and soundness
regulator, the Office
of Federal Housing
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identified numerous
control issues in a
special examination
and declared us
“significantly
undercapitalized.”
We were receiving
numerous legal and
regulatory inquiries.
Our relevance to the
mortgage capital markets was shrinking.
is is not the place to recount the day-to-day challenges
of setting things right, but a brief replay of our actions,
major changes, and milestones is in order:
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in retained earnings (including a painful cut to the
dividend, since then mostly restored) and the issuance
of $5 billion of preferred stock. We achieved and
maintained capital compliance as of September 30,
2005, including a 30 percent surplus required by our
regulator.
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2004, we undertook and completed a top-to-bottom
reassessment of all of our accounting principles and
applications.
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completed and filed our financial results for 2005 and
2006, and indicated our intention to file our 2007
full-year results on time.
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of our 25 Sarbanes-Oxley material weaknesses – we
intend to be completely remediated by the time we
file our 2007 10-K – and we invested more than $300
million in systems and controls to strengthen our
reporting capabilities.
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Risk Officer, our Chief Compliance Officer, and our
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Audit Committees of the Board.
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company or in new roles; the senior management team
has rebuilt key departments, including Finance, Audit,
Risk Management, Controller’s and Legal, and has
overhauled business strategies in each of our segments.
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Controller’s, and Audit departments.
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Touche, the same firm that had provided our regulator,
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aforementioned
special
examination.
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settlements with
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$50 million and
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million returned
to shareholders
via the Fair Fund),
and the Justice
Department
concluded
its investigation with no action. We supported
legislation to create a strong regulatory regime for
the government-sponsored housing enterprises,
including Fannie Mae; a bill passed in the House of
Representatives by a strong, bipartisan vote.
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around the country to enhance our business and
community development strategies.
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the establishment of broad performance goals, and
eliminated option grants as the principal form of equity
award. Reflecting executive accountability, as well as
alignment with our stakeholders, the Board eliminated
senior management cash bonuses for 2004 entirely.
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behavior, summarized by the attributes of “Service,
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Individual performance and leadership – measured by
interviews and 360-degree surveys – are critical factors
in determining a significant portion of annual officer
compensation.