OFHEO Sets GSE Pay Standards

The Office of Federal Housing Enterprise Oversight has issued examiner guidance that establishes corporate governance and compensation standards for Fannie Mae and Freddie Mac.OFHEO Director James Lockhart said many provisions of the guidance are "designed to prevent a recurrence of the serious problems found in OFHEO's special examinations" of the two government-sponsored enterprises. One provision requires employee agreements and contracts to include "claw-back" provisions so that anyone terminated for misconduct can be forced to return past compensation. The corporate government provisions call for a GSE chairman to be an independent board member. In addition, the guidance states that board members have broad responsibilities that "go beyond a short-term focus on maximizing shareholder value." OFHEO can be found online at http://www.ofheo.gov.