Fannie Mae Slashes Dividend To ConserveCapital

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WASHINGTON - (01/19/05) -- Fannie Mae shares slumped 2% inafter hours trading to $68.20 Tuesday after the company announcedit was cutting its common stock dividend by 50% to 26 cents to helpit conserve capital. The move, the first quarterly dividend cut inalmost 24 years, comes just two weeks after the secondary mortgagemarket giant raised $5 billion in new capital through the sale ofpreferred stock. The capital building is in response to a mandateby the company's regulator, the Office of Federal HousingEnterprise Oversight, that Fannie needs to raise its capital by 30%to make up for a massive shortfall in accounting--as much as $9billion. The company also slashed dividends on 10 different seriesof preferred shares.

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