Best-Selling 'Built to Last' Author Jim Collins' Latest Book Lists Fannie Mae Among 11 Public U.S. Companies Transformed from 'Good to Great'.

Business Editors

WASHINGTON--(BUSINESS WIRE)--Oct. 12, 2001

Fannie Mae (NYSE:FNM
FNM Free National Movement (Bahamas)
FNM Foot and Mouth ), the nation's largest source of financing for home mortgages, is one of 11 U.S. companies that went from "Good to Great," says author Jim Collins in his first book since the best-selling business book "Built-to-Last."

The result of five years of research on more than a thousand publicly-traded companies, "Good to Great: Why Some Companies Make the Leap ... and Others Don't" (HarperBusiness, 2001), features Fannie Mae and 10 others as companies that achieved greatness.

The standard: generating a cumulative stock return at least three times greater than the general market for a period of 15 years -- independent of the industries in which the companies operate. Only one of the 11 "great" companies - Circuit City -- outperformed Fannie Mae during the periods studied.

"Considering the academic and commercial success of "Built to Last," it is certainly an honor to be one of a handful of companies featured in Jim Collins' latest book, 'Good to Great,' " said Franklin D. Raines, Chairman and CEO of Fannie Mae. "The real honor, however, goes to our Board of Directors, former and current; my predecessors, David Maxwell and Jim Johnson; and thousands of current and former Fannie Mae employees. This company's greatness is embodied and demonstrated every day in the hard work and dedication to our mission to tear down barriers and expand homeownership for all Americans that is exhibited by all connected with Fannie Mae."

Fannie Mae is the only Washington-area company among the 11, and joined Wells Fargo as the only financial services companies on the list.

"At first glance, we were surprised by the list," writes Collins in the book, due in bookstores on October 16, 2001. "Who would have thought that Fannie Mae would beat companies like GE and Coca-Cola. Or that Walgreens would beat Intel?"

Among the Fannie Mae achievements Collins cites:

-- The decision by former Chairman and CEO David Maxwell, according to Collins
a "Level V Leader" common to great companies, to first assemble the right
executive team before deciding what to do with Fannie Mae as a company -
another critical pattern of greatness Collins calls "First Who, Then What." The
result, says Collins, is that Fannie Mae had "some of the best, smartest and
hardest-working executives in the entire world of finance. The same standard
applied up and down the Fannie Mae ranks as managers at every level increased
the caliber of their teams and put immense pressure upon each other."

-- The company's shift from profit per mortgage to profit per mortgage risk
level reflected the fundamental insight that managing interest rate risk
reduced the company's sensitivity to shifts in the direction of interest rates.
It's why Fannie Mae has been able to sustain consistently strong earnings
growth in both low- and high-interest rate environments.

-- A "simple, crystalline understanding that it could be the best capital
markets player in anything related to mortgages ... in opening up the full
capital markets to the mortgage process," an example of Collins' "Hedgehog
Concept" of doing one thing very well. The company, Collins said, built
economic success "by reframing its business model on risk management, rather
than mortgage selling. And it drove the machine with great passion, the Fannie
Mae people inspired by its vital role in democratizing home ownership."

-- The decision to move technology out of the back office and harness it to
transform every part of Fannie Mae. Fannie Mae created an expert system,
Desktop Underwriter(R), which lowers the cost of becoming a homeowner. "To
date, the system has saved home buyers nearly $4 billion," Collins noted in
2000. Such reliance on technology also has helped to give Fannie Mae a
cost-to-income ratio that is a fifth of that of other larger financial services
companies, and, based on assets and sales per employees, makes the company one
of America's most productive.

"As the U.S. population and the number of households continue to grow, the demand for homeownership in this decade will be even greater than in the record-breaking 1990s," said Raines. "And so our continued adherence to the concepts that Jim Collins identified as helping our company go from "Good to Great" will be critical not just to our company and its shareholders, but to the homeownership aspirations of millions of Americans."

Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages.

Fannie Mae is working to shrink the nation's "homeownership gaps" through a $2 trillion "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade. Since 1968, Fannie Mae has provided more than $3.0 trillion of mortgage financing for 40 million families.

More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.

Desktop Underwriter is a registered mark of Fannie Mae. Unauthorized use of this is prohibited.

Style Usage: Fannie Mae's Board of Directors has authorized the company to operate as "Fannie Mae," and the company's stock is now listed on the NYSE as "Fannie Mae." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."