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To: Secret_Agent_Man who wrote (204576)	11/13/2002 8:15:34 PM
From: Secret_Agent_Man	Respond to of 436258

NEW YORK (Dow Jones)-Fannie Mae's (FNM) third-quarter summary report shed some light on its derivative counterparty exposure and provides clues on how the firm managed to narrow its duration gap. According to Fannie Mae's third quarter investment analyst report, Fannie Mae's exposure to counterparty default increased to $401 million at September 30, 2002, versus $278 million at June 3, 2002. The increase, according to one analyst, is not an "outrageous figure given the company's overall use of derivatives." Fannie Mae's primary credit exposure on derivatives is that a counterparty might default on payments due, which could result in Fannie Mae having to replace the derivative with a different counterparty at a higher cost. Fannie Mae's exposure on derivative contracts was $2.723 billion at September 30, 2002.