THE OFFICE OF FEDERAL HOUSING Enterprise Oversight (OFHEO), Washington, D.C., announced in June a final rule on corporate governance that enhances the transparency of regulatory standards for the executives and boards of directors of the government-sponsored enterprises (GSEs). The final rule requires the GSEs to do the following:

* Elect to follow the corporate governance practices and procedures of either the jurisdiction in which the GSE is located, Delaware law or the Model Business Corporation Act.

* Establish and maintain audit and compensation committees of their board of directors.

* Ensure compensation of board members, executive officers and employees is not excessive, unreasonable or otherwise inconsistent with legal standards.

* Implement minimum quorum and voting requirements for board actions.

* Establish and maintain written conflict-of-interest standards.

* Comply with specific minimum standards for the conduct and responsibilities of the GSEs' boards of directors.

The final regulation also states the broad authority of OFHEO to prohibit indemnification of a GSE's board members and executives, including the indemnification of activities involving intentional misconduct or recklessness. …