Magazine article Mortgage Banking

OFHEO Announces Final Rule for GSEs. (Business Alert)

Magazine article Mortgage Banking

OFHEO Announces Final Rule for GSEs. (Business Alert)

Article excerpt

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. …

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