Fannie Mae 2008 Annual Report Download - page 26

Topic Before Conservatorship As of February 26, 2009
Authority of Board of
Directors,
management and
shareholders
• Board of Directors with right to determine
the general policies governing the
operations of the corporation and exercise
all power and authority of the company,
except as vested in shareholders or as the
Board chooses to delegate to management
• Directors with duties to shareholders
• Board of Directors delegated significant
authority to management
• Shareholders with specified voting rights
• FHFA, as conservator, succeeded to all of
the power and authority of the Board of
Directors, management and the
shareholders
• The conservator has delegated authority to
a newly constituted Board of Directors.
The Board is required to consult with and
obtain the consent of the conservator before
taking action in specified areas. The
conservator may modify or rescind this
delegation at any time
• Directors do not have any duties to any
person or entity except to the conservator.
• The conservator has delegated authority to
management to conduct day-to-day
operations so that the company can
continue to operate in the ordinary course
of business. The conservator retains overall
management authority, including the
authority to withdraw its delegations to
management at any time
• Shareholders have no voting rights
Structure of Board of
Directors
• 13 directors: 12 independent plus President
and Chief Executive Officer; independent,
non-executive Chairman of the Board
• Seven standing Board committees,
including Audit Committee of which four
of the five independent members were
“audit committee financial experts”
• 10 directors: 9 independent plus President
and Chief Executive Officer; independent,
non-executive Chairman of the Board. Up
to three additional Board members may be
added by the Board subject to approval of
the conservator
• Four standing Board committees, including
Audit Committee of which three of the four
independent members are “audit committee
financial experts”
Capital • Statutory and regulatory capital
requirements
• Capital classifications as to adequacy of
capital issued by FHFA on quarterly basis
• Capital requirements not binding
• Quarterly capital classifications by FHFA
suspended
Net Worth
(1)
• Receivership mandatory under Regulatory
Reform Act if FHFA makes a written
determination that we have net worth
deficit for 60 days
• Conservator has directed management to
focus, to the extent it does not conflict with
our mission, on maintaining positive net
worth
• Receivership mandatory if FHFA makes a
written determination that we have net
worth deficit for 60 days
(2)
Management Strategy • Maximize shareholder value over the long-
term
• Fulfill our mission of providing liquidity,
stability and affordability to the mortgage
market
• Directed to provide liquidity, stability and
affordability in the mortgage market and
immediately provide additional assistance
to this market and the struggling housing
market, and to the extent not in conflict
with our mission, to maintain positive net
worth
• No longer managed with a strategy to
maximize common shareholder returns
• Focus on foreclosure prevention
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