Meanwhile, in prepared testimony released Wednesday morning, Fannie Mae chairman and chief executive Franklin Raines fought back against allegations that company executives manipulated earnings in order to pay $27 million in bonuses to its top officers back in 1998.In the testimony scheduled for delivery before the House Financial Services subcommittee on government-sponsored enterprises, Mr. Raines declared that even though Fannie Mae signed a supervisory agreement last week with its regulator, it is in no way admitting any wrongdoing. Commenting specifically on the allegation that the company deferred $200 million in expenses in 1998 to meet a bonus trigger, he said, "This is a serious allegation, and we strongly disagree with it." He also described hedge accounting (FAS 133) as "one of the most complicated accounting standards ever issued," noting that ultimately the Securities and Exchange Commission -- not the Office of Federal Housing Enterprise Oversight -- will have the final say on whether Fannie's interpretations of the rule are correct.

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