Much Ado About...?

Last year, it was Freddie Mac that went through a wringer after regulators found problems with its accounting practices. Now it's Fannie Mae's turn. At the time when Freddie Mac's turmoil erupted, along with a house cleaning that unceremoniously dumped the company's top executives, MSN expressed regret about the way that accounting scandal had been handled.

Specifically, we felt Freddie Mac might have done itself more harm than good by ushering long-time chairman and CEO Leland Brendsel out the door without so much as a thank you. He had, after all, provided stewardship to a company that helped make long-term, fixed-rate financing available for homebuyers while generating substantial returns for shareholders.

We hope that Fannie Mae is able to manage its crisis more smoothly.

First, a couple of points to remember. Fannie Mae, like its secondary market rival, stands accused of trying to manipulate the timing of earnings and losses, not of manufacturing phantom earnings. That's a lot different than the kind of wholesale accounting fraud that occurred at corporate scofflaws such as Enron and WorldCom, where billions of hidden debt and phantom earnings led to ...