Fannie Mae's former chief financial officer Timothy Howard and former controller Leanne Spencer were primarily responsible for abusing accounting rules that led to the GSE's $11 billion earnings scandal, according to a long awaited internal report conducted by retired U.S. senator Warren Rudman.However, the Rudman report says former chairman and CEO Franklin Raines "was ultimately responsible" for management's abuse of general accepted accounting principals, noting that top executives at the company were "aware" of departures from GAAP. Released Thursday morning, the report seems to clear the GSE's board of all wrongdoing, saying the board was misled by "management." Mr. Rudman and his investigators charge that GSE employees who occupied "critical" accounting and audit functions at the company were unqualified for their positions or did not understand their roles. Also, Mr. Howard is singled out for not cooperating at all with the investigation, while Ms. Spencer cooperated early on but then declined further interviews "after we became aware of a critical document in her files, which Spencer had failed to produce...." Law enforcement officials and regulators were briefed on the report's findings before its release. The investigation, however, is not done. The report says the company has brought to the attention of investigators "new materials" that could be relevant. Messrs. Raines, Howard and Ms. Spencer have yet to comment on the report.

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