Meanwhile, an official of the General Accounting Office has testified that the composition of Fannie Mae's board of directors is not consistent with principles of good corporate governance.GAO Comptroller General David Walker noted that three of the mortgage company's top executives are the highest-ranking members on the board. Chief executive officer Franklin Raines is the board chairman, and chief operating officer Daniel Mudd and chief financial officer Timothy Howard are vice-chairmen. "All too frequently, such individuals will have significant influence over who is asked to join the board and who is asked to leave it," Mr. Walker told the Senate Banking Committee. Mr. Raines has dismissed suggestions that he give up his position as chairman of the board. He contends that the Business Roundtable favors flexibility on the issue of dual posts, and that it should be not be a hard-and-fast rule for any company. Last year, Mr. Raines served as chairman of the Business Roundtable's corporate governance committee. The GAO official maintained that the government-sponsored enterprises should lead by example and "strive to have a truly independent board." Fannie's regulator -- the Office of Federal Housing Enterprise -- is working on regulations that would require Fannie and Freddie Mac to split the CEO and chairman functions.

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