The Wheels of Justice Flatten Fannie Mae

Can the Fannie Mae (FNM Quote) scandal now take its place as the Enron-sized debacle it long has been shaping up as?

Up till Wednesday, many on Wall Street and in Washington were quite willing to downplay a detailed report by Fannie's regulator that showed the company had used faulty accounting in a way that allowed it to keep billions of dollars of losses out of its income statement.

But Wednesday evening, the Securities and Exchange Commission, the stock market's main cop, gave Fannie's regulator its backing by saying that Fannie had violated accounting rules. The agency took particular issue with the way Fannie accounts for derivatives, which are financial instruments the company uses to insure itself against adverse movements in interest rates. ...