Federal National Mortgage Association
3900 Wisconsin Ave. NW
Washington, D.C. 20016
www.fanniemae.com Year founded: 1938 Industry: Financial services Revenue: $53.77 Billion Net Income/Loss: $7.91 Billion Earnings per share: $7.91 Dividend: $1.68 Stockholder equity: $22.37 Billion Auditor: KPMG LLP Stock: FNM Assets: $1.01 Trillion Market capitalization: $70.34 Billion 52-week high: 80.82 2/23/2004 52-week low: 60.11 8/25/2003 Chairman and CEO: Franklin D. Raines Vice chairman and COO: Daniel H. Mudd Employees: 5100 Local employees: 4100 Description: Fannie Mae is a government-sponsored enterprise that plays a major role in the mortgage finance system by helping replenish money available for home mortgages. Like its sibling rival, Freddie Mac, it buys mortgages from banks and savings and loans. It holds some and repackages others for sale. With the perceived backing of the federal government, Fannie Mae, like Freddie Mac, can borrow money at favorable rates and invest it in mortgages paying prevailing rates, earning a profit on the spread. Developments: Fannie Mae spent much of last year dealing with the fallout from the accounting problems at Freddie Mac. Given the similarity between the two companies' businesses, the billions of dollars of accounting errors at Freddie cast suspicion on Fannie. Fannie chief executive Franklin D. Raines complained the problems at Freddie were raising Fannie's borrowing costs. "I've jokingly said to friends that I now know what the definition of collateral damage is, and we have suffered a lot of that, I think unfairly," Raines told reporters in July. "Unlike Freddie Mac, we didn't do any of these things." Fannie fanned the flames in October when it announced it had made computational errors of more than $1 billion in reporting quarterly financial results. The error, which understated stockholders' equity, involved valuations of complex financial instruments known as derivatives, which had also bedeviled Freddie. The Office of Federal Housing Enterprise Oversight began an examination of Fannie's accounting, which is still in progress. The oversight office recently warned that the review could lead to a correction of Fannie's past financial statements. Also last year, Fannie began reporting to the Securities and Exchange Commission, which it was exempt from doing because of its special status and which Freddie Mac has yet to do. Fannie's earnings last year climbed 71.1 percent. That was largely driven by unrealized changes in the value of derivatives the company held. In addition, the wave of refinancings produced a windfall for Fannie. That was because, as mortgages were prepaid, Fannie immediately booked income from guarantee fees that would have been spread over the full term of the loans. The company said it met a goal set in 1999 to double earnings in five years. The problems at Freddie prompted members of Congress and the Bush administration to propose new ways of regulating the mortgage-funding companies. Fannie publicly stated that it supported a strong new regulator, but some members of Congress said it torpedoed the reform effort behind the scenes. Congress is still working on it. A number of senior government officials question the need for government sponsorship of Fannie and Freddie and the benefits they provide while warning that they could put the financial system at risk, criticisms Fannie rejects. Federal Reserve Chairman Alan Greenspan recently advised lawmakers to limit the amount of debt the companies can take on and the volume of mortgages they can hold. The Senate Banking Committee recently approved a bill that would give a new regulator the power to put Fannie and Freddie in receivership and liquidate them if they became insolvent, but the Bush administration said it opposed the bill because the committee had watered down the proposed receivership power too much. Executive Compensation
Chairman and CEO: Franklin D. Raines
Total Cash: $5,172,615.00
Total Compensation: $23,706,635.00 COO and Vice Chairman: Daniel H. Mudd
Total Cash: $2,002,252.00
Total Compensation: $11,987,536.00 CFO and Vice Chairman: Timothy Howard
Total Cash: $1,822,010.00
Total Compensation: $10,684,902.00 Executive Vice President: Robert J. Levin
Total Cash: $1,368,943.00
Total Compensation: $9,081,582.00 Executive Vice President: Thomas E. Donilon
Total Cash: $1,221,512.00
Total Compensation: $7,543,528.00
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