On Aug. 11, 2006, Standard&Poor's Ratings Services said that its 'AA-' risk to the government, subordinated debt, and preferred stock ratings on Fannie Mae remain on CreditWatch Negative following the release of the company's 12b-25 filing on Aug. 9. The ratings were initially placed on CreditWatch on Sept. 23, 2004. While the latest update on Fannie Mae's accounting restatement process revealed some positive developments, it also disclosed an additional accounting error that was discovered as part of the restatement process. The new accounting error, involving accounting for master servicing arrangements under SFAS 140, will not result in a significant impact on Fannie Mae's regulatory capital. Given the evolving process of the accounting restatement, and the uncertainty surrounding the
