Fannie Mae chairman and chief executive officer Franklin Raines would be required to drop one of his titles under a strict corporate governance rule proposed by the Office of Federal Housing Enterprise Oversight.Freddie Mac has already agreed to separate chairman and CEO functions as part of a $125 million settlement with OFHEO over its accounting problems. Under the OFHEO proposal, which is being issued for a 60-day comment period, Fannie would have to implement the same policy starting in 2007. Separating the functions of chairman and CEO would strengthen the oversight of the board of directors' independence and oversight of the company, according to OFHEO. "This reasonable step will assist both in the perception and reality that these specialized institutions maintain the highest standards of corporate governance," the proposal says. So far, Mr. Raines has resisted suggestions that he relinquish one of his titles. "We look forward to reviewing the proposed rule and providing our comments to OFHEO," Fannie Mae spokesman Chuck Greener said.

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