Capital Surplus Looks Like Long-Term Requirement

The OFHEO report on Fannie Mae's accounting woes recommends that Fannie Mae "must maintain a capital surplus" until the OFHEO director determines that a change in the surplus requirement is warranted.The report also backs limits on the growth of Fannie Mae's portfolio, an issue currently under consideration in Congress. Maintaining the 30% excess capital requirement could complicate Fannie Mae's efforts to return more capital to shareholders in the form of dividends or other paybacks. Trading of Fannie Mae's stock was frozen this morning in anticipation of the news and remained closed at noon, but an NYSE spokesperson said trading would reopen shortly.