S&P: Fannie Ratings Still on Watch

Standard & Poor's Ratings Services has announced that its AA-minus ratings of Fannie Mae remain on CreditWatch Negative in the wake of the government-sponsored enterprise's recent filing with the Securities and Exchange Commission.The ratings relate to Fannie Mae's risk to the government, its subordinated debt, and its preferred stock. "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," said S&P credit analyst Victoria Wagner. S&P said the new error, which involves accounting for master servicing arrangements under the Statement of Financial Accounting Standards No. 140, is not expected to have a "significant" effect on the GSE's regulatory capital. The ratings will remain on CreditWatch Negative until "critical uncertainties" are clarified, S&P said. The rating agency can be found online at http://www.standardandpoors.com.