Office of Federal Housing Enterprise Oversight
1700 G Street, NW
Washington, DC 20552
of this letter is to request that the Office of Federal Housing Enterprise
Oversight (OFHEO) consider a rulemaking to strengthen the corporate governance
of Fannie Mae and Freddie Mac and require the Enterprises to make certain
such steps, OFHEO will be advancing goals outlined by the President in
his Ten-Point Plan for Corporate Responsibility and Protecting America's
Shareholders: providing better information to investors; making corporate
officers more accountable; and developing a stronger, more independent
audit system. The Securities and Exchange Commission (SEC) has a leadership
role in pursuing these goals with respect to publicly traded companies,
and it is within the purview of OFHEO's regulatory mission to extend generally
applicable principles of governance and disclosure to Fannie Mae and Freddie
Mac. Even though they are not subject to direct SEC oversight, as publicly
traded companies Fannie Mae and Freddie Mac should be subject to no lesser
standard than applies to other companies.
2001, OFHEO published a proposed rule to codify the corporate governance
requirements for Fannie Mae and Freddie Mac that currently exist in OFHEO's
guidance to the Enterprises. We request a further rulemaking that would
include additional requirements to strengthen corporate governance of
Fannie Mae and Freddie Mac. OFHEO should work closely with the SEC as
OFHEO pursues efforts to apply to the Enterprises the corporate governance
recommendations in the President's Ten-Point Plan.
In April 2002, OFHEO publicly announced a review of public disclosures
by the Enterprises. It is our understanding that OFHEO plans to assess
whether current disclosures meet SEC criteria, and also to consult with
analysts about additional disclosures that would enhance market transparency.
OFHEO's public announcement does not commit to a rulemaking on disclosures.
We request that OFHEO consider a rulemaking to require each Enterprise
to disclose publicly the information that is required of publicly traded
companies by the SEC, including any additional disclosures SEC requires
in the future. While the Enterprises now voluntarily comply with many
of these disclosures, they are not required to do so. Such voluntary compliance
might be abandoned at a time when it is most needed.
also consider disclosures to enhance market transparency related to the
unique issues involved in the operation of government-sponsored enterprises.
OFHEO should study the disclosures favored by the Multidisciplinary Working
Group on Enhanced Disclosures.
considers a rulemaking to strengthen the corporate governance and public
disclosures of Fannie Mae and Freddie Mac, I and others at the Office
of Management and Budget (OMB) are eager to work with you to ensure the
best possible rule and supporting analysis. At your earliest convenience,
OMB staff would like to meet with your staff to discuss this effort.
John D. Graham,