(This is Part 1 of a two-part series. See Part 2: New operating models proposed for Fannie Mae.) "The media has been full of stories recently about accounting scandals at Fannie Mae. Is this another Enron? What does it mean to John Q. Public?" It is an accounting scandal, and heads have rolled as a result, but it is not another Enron. The phony accounting at Enron concealed massive losses whereas the phony accounting at Fannie Mae concealed large fluctuations in income. Absent the phony accounting, Enron was insolvent, but Fannie remains solvent and very strong, if not quite as strong as it had appeared earlier. Yet there is more at stake in the Fannie case because Fannie Mae is a "government-sponsored enterprise." While Fannie and its smaller sister agency Freddie Mac have private share...
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