On the heels of yet another in-depth report, this one delivered by the Office of Federal Housing Enterprise Oversight, the top executive at home mortgage behemoth Fannie Mae said that his is a changed company.

"We have all learned some powerful lessons here about getting things right and about hubris and humility," said president and chief executive Daniel Mudd, in a statement, announcing a $400 million settlement with federal regulators. "We are a much different company than before."

The most current estimates out of Fannie Mae are that its accounting chicanery, which spanned from the 1998 to 2004 fiscal years, will cause the company to reduce its net income by upwards of $11 billion in restatements. Seemingly every other month (and in 2006, much more often than that), Fannie Mae has been forced to announce that it has uncovered more errors in its accounting, the departures of prominent personnel, or the release of yet another report airing its dirty financial statement laundry.

The company's own report, prepared by an independent former Congressman and released in February, has already been followed by not one, but two additional reports of newly unearthed accounting problems. While the latest problems may not have too material an impact on the restatement, they serve as highlights of the problem with convoluted corporate accounting measures and attempting to police them from even inside a multi-billion-dollar business.

The magnitude of that anticipated $11-billion restatement is somewhat diminished when looking at the scale of the Fannie Mae's portfolio. The easy parallel to draw might be that it's easy to manipulate the cash-in, especially when so much cash is actually flowing in. Government-chartered Fannie Mae, along with its smaller sibling, Freddie Mac, holds a bout $1.4 trillion in assets, a figure Congress has floated proposals to reduce.

The OFHEO report specifically cited exorbitant executive bonuses tied to performance. For the six years through 2003, the report said that $52 million of the $90 million of compensation for Franklin D. Raines, the former chief executive officer, was directly tied to meeting targets for earnings per share. The company's battle to get that cash back, and the money awarded to other top executives implicated in the accounting fraud, could spark a juicy court battle if settlements aren't reached. The Securities and Exchange Commission's investigation and a criminal inquiry from the Department of Justice continue.

It'd be nice to hope that the SEC's heightened disclosure rules for executive pay could stop some of the bloated rewards, but there's no reason to change the notion of salaries based on a pay-for-performance system. But looking at the wrath that the short-term wheeling and dealing at Fannie Mae has wrought, I hope more companies consider going the route of public companies such as Google Inc.

When Google launched its initial public offering a couple of years back, its founders said they would not kowtow to the demands of Wall Street to set arbitrary short-term, quarterly goals. Instead the company vowed to set its goals for the much longer term, and achieve growth in a lasting, stable way.

Fannie Mae's accounting woes may not have lead to the company's collapse, but it did lead to the loss of something else, that it's hard to attach a dollar figure to. As acting OFHEO director James B. Lockhart put it, as his agency released its recent report, "The image of Fannie Mae as one of the lowest-risk and 'best-in-class' institutions was a facade. Our examination found an environment where the ends justified the means. Senior management manipulated accounting, reaped maximum, undeserved bonuses, and prevented the rest of the world from knowing."

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