Internal Oversight at CFC Enterprise-wide Governance Structure CFC's governance structure is driven by ethics, disclosure, accounting and the appropriate "tone at the top" - the fundamentals of effective governance - to ensure that the Company has a strong system of internal controls and risk management practices in place ahead of its growth in order to support its long-term strategies and future business success. A three-tiered Enterprise-wide Governance structure ensures accountability and oversight from the Operational level through the Institutional level to the Board level. Board Governance - The Board of Directors is responsible for ensuring that Countrywide is managed in a manner that serves the best interests of the Company. The Board takes its fiduciary duties and responsibilities seriously, meeting frequently with senior management and employees to measure Countrywide's performance and the adequacy of its strategic plans. The Board's oversight is supported by distinct management committees responsible for ensuring that Countrywide regularly receives the highest caliber of monitoring, compliance, reporting, and risk assessment and management possible. Institutional Governance - CFC's senior policy-making groups oversee Operational Governance and report up to Board Governance. The Institutional Governance committees are composed of executive and senior management and are primarily focused on specific risk areas, such as Credit Risk, Market Risk, and Operational Risk. They also provide a strategic and corporate vision to CFC by enabling alignment of divisional plans and priorities, guiding allocation of resources, and defining top strategic goals and initiatives. Operational Governance - Countrywide also takes governance to the operational level, where approximately 350 risk managers in business unit operations across the Company are charged with identifying, measuring, mitigating and monitoring individual business risks in their respective areas. Executive Committee The Executive Committee, which includes the Executive Managing Directors, Senior Managing Directors, and certain other Managing Directors, supports CFC's CEO and President in providing corporate-level oversight, leadership and strategic vision for the Company. The Committee participates in reviewing strategic alternatives and managing the high-level operations of the Company. Major areas of the Executive Committee's focus include, but are not limited to: competitive threats and industry issues; capital requirements; cultural issues; review and oversight of budgets and strategic plans (at both the divisional and corporate levels); strategic issues connected to the workforce (including diversity, benefits and levels of compensation); corporate risk management and assessment; acquisition strategies and the strategic fit of specific M&A targets; organizational structure at the divisional and corporate levels; and oversight of Corporate Priority Objective Committees. Risk Management All CFC employees are responsible to varying degrees for risk management and internal controls. The intention of the Board of Directors and Management is for every CFC employee to help identify risks to the Company and assist in managing those risks. The Board of Directors assesses and allocates CFC's risk-bearing capacity, which depends on the organization's appetite for risk. Once this is determined, the various Institutional Governance Committees formulate policies relating to the management and control of all risks, and then line-of-business managers are held accountable for management of their risks. Enterprise Risk Assessment The Enterprise Risk Assessment (ERA) division provides an ongoing, independent assessment of market, credit, operational and governance risk and ensures the sufficiency of risk documentation in the Countrywide Organizational Risk Assessment Database (CORAD). ERA reports to the Audit & Ethics Committee of the Board and to the Company's president. ERA's Regulatory Relations group assesses the effectiveness of all regulatory relations within CFC and ensures that CFC guides regulatory oversight in a consistent manner. Regulatory Relations performs the liaison role for examinations of CFC. Audit/Review Functions The Internal Audit Department performs an independent, objective consulting and appraisal activity within the Company. This review is conducted primarily as a service to the Audit and Ethics Committee of the Board of Directors and to Management. Internal Audit is a managerial control which functions by measuring and evaluating the effectiveness of other controls. It helps the organization accomplish its objectives through a systematic, disciplined approach to evaluate and improve the effectiveness of the Company's risk management and controls.