On Dec. 7, 2006, Standard&Poor's Ratings Services removed its 'AA-' risk-to-the-government, subordinated debt, and preferred stock ratings on Fannie Mae from CreditWatch with negative implications, where they were placed on Sept. 23, 2004. The ratings are affirmed and the outlook is negative. The rating action reflects Fannie Mae's progress in its accounting restatement process and the build-up of a stronger capital position. Fannie Mae has maintained a regulatorily mandated, 30% capital surplus above its regulatory minimum capital requirements for four consecutive quarters. Management of its balance sheet growth and lower returns of capital to shareholders were the primary drivers behind its achieving the 30% capital surplus position over the higher capital ratios. Standard&Poor's expects that the
