Fannie Mae has agreed to pay $400 million in civil penalties to the Securities and Exchange Commission, and Office of Federal Housing Enterprise Oversight to settle allegations of wrongdoing in connection with its $10.8 billion accounting scandal.As part of the settlement the GSE will implement corrective measures, including growth limits, and remedial actions against current and former employees. OFHEO also requires that its board submit governance policies and procedures to the agency within 180 days. In a statement Fannie Mae chairman Stephen Ashley said, "We are pleased that we have been able to reach a comprehensive agreement and bring these matters to a conclusion." In a shareholder lawsuit, Mr. Ashley and other directors -- past and present -- are accused of turning a blind eye to the company's accounting woes because they were involved in "mutually beneficial relationships" with the GSE and did not operate as independent directors. Fannie Mae is trying to get the lawsuit dismissed.

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