On Feb. 28, 2008, Standard&Poor's Ratings Services affirmed its 'AAA/Stable/A-1+' senior debt rating on Fannie Mae. It also affirmed its 'AA-/Negative/--' risk-to-the-government ratings and 'AA-' subordinated debt and preferred stock ratings on Fannie Mae. The negative outlook is based on a lower earnings outlook for 2008 and its related effect on Fannie Mae's capital position. The longer duration of the weak housing markets in the U.S. and weak pricing for mortgage loans in the capital markets have increased Fannie Mae's credit-related expenses, which are approaching an all-time high, and the view for 2008 is for higher credit losses. The traditional credit expenses--net charge-offs and real estate owned-related expenses--are under Fannie Mae's previous peak of cycle losses. However, when
