S&P: Fannie Mae still on watch

Standard & Poor's said its AA- risk to the government, subordinated debt and preferred stock ratings on Fannie Mae remain on CreditWatch negative, where they were placed on Sept. 23, 2004.

The agency said that this follows Fannie Mae's agreement to implement corrective measures and pay a penalty of $400 million as part of collective settlements with the Office of Federal Housing Enterprise Oversight, its primary regulator and the SEC.

The consent order is the latest written agreement for Fannie Mae and includes the continuation the requirement to maintain the 30% capital surplus over the minimum regulatory requirement and restrictions for increasing the mortgage portfolio above the Dec. 31 level, S&P noted.

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