Fannie Mae 2007 Annual Report Download - page 51

• legislative or regulatory actions relating to our business, including any actions that would affect our GSE
status or add additional requirements that would restrict or reduce our ability to issue debt;
• our credit ratings, including rating agency actions relating to our credit ratings;
• our financial results and changes in our financial condition;
• significant events relating to our business or industry;
• the public’s perception of the risks to and financial prospects of our business or industry;
• the preferences of debt investors;
• the breadth of our investor base;
• prevailing conditions in the capital markets;
• foreign exchange rates;
• interest rate fluctuations;
• the rate of inflation;
• competition from other issuers of AAA-rated agency debt;
• general economic conditions in the U.S. and abroad; and
• broader trade and political considerations among the U.S. and other countries.
If we are unable to issue debt securities at attractive rates in amounts sufficient to operate our business and
meet our obligations, it would have a material adverse effect on our liquidity, earnings and financial condition.
A decrease in our current credit ratings would have an adverse effect on our ability to issue debt on
acceptable terms, which would reduce our earnings and materially adversely affect our ability to conduct
our normal business operations and our liquidity and financial condition.
Our borrowing costs and our broad access to the debt capital markets depend in large part on our high credit
ratings, particularly on our senior unsecured debt. Our ratings are subject to revision or withdrawal at any time
by the rating agencies. Any reduction in our credit ratings could increase our borrowing costs, limit our access
to the capital markets and trigger additional collateral requirements under our derivatives contracts and other
borrowing arrangements. A substantial reduction in our credit ratings would reduce our earnings and
materially adversely affect our liquidity, our ability to conduct our normal business operations and our
financial condition. Our credit ratings and ratings outlook is included in “Part II—Item 7—MD&A—Liquidity
and Capital Management—Liquidity—Credit Ratings and Risk Ratings.”
Our business is subject to laws and regulations that restrict our activities and operations, which may
adversely affect our earnings, liquidity and financial condition.
As a federally chartered corporation, we are subject to the limitations imposed by the Charter Act, extensive
regulation, supervision and examination by OFHEO and HUD, and regulation by other federal agencies,
including the Department of the Treasury and the SEC. We are also subject to many laws and regulations that
affect our business, including those regarding taxation and privacy. In addition, the policy, approach or
regulatory philosophy of these agencies can materially affect our business.
Regulation by OFHEO could adversely affect our earnings and financial condition. OFHEO has broad
authority to regulate our operations and management in order to ensure our financial safety and soundness. For
example, pursuant to our consent order with OFHEO, we currently may not increase our net mortgage
portfolio assets above a specified amount that is adjusted on a quarterly basis, and we are required to maintain
a 30% capital surplus over our statutory minimum capital requirement. These restrictions limit the amount of
mortgage assets that we are able to purchase and securitize, which limits our ability to grow our mortgage
credit book of business. As a result, these restrictions could negatively impact our earnings. Similarly, any new
or additional regulations that OFHEO may adopt in the future could adversely affect our future earnings and
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