Fallout from Fannie, Freddie.(Federal Home Loan Mortgage Corp., Federal National Mortgage Association)

More than three years after Freddie Mac first acknowledged that it may have made accounting errors in what some people think was an effort to "smooth out" earnings, both Freddie and secondary market rival Fannie Mae remain mired in efforts to revamp their accounting infrastructure and regain the confidence of regulators and investors.

The plight of the two secondary market giants, which have spent hundreds of millions of dollars trying to fix their problems, is a cautionary lesson for companies trying to account for complicated mortgage assets in their financial statements. You've heard the saying that an ounce of prevention is worth a pound of cure. The cost of re-mediating accounting problems at the two giant secondary market corporations illustrates that principle well.

Both Fannie Mae and Freddie Mac announced news lately that highlights just what they've been through, and just how far they will have to go before their problems are put behind them.

Fannie Mae went first, announcing in late May that it had agreed to pay a $400 million fine amid charges that the company manipulated earnings to meet executive bonus targets. The company still faces shareholder litigation that could put the eventual cost much higher and is nowhere near the point ...