The Federal National Mortgage Association (FNMA, Fannie Mae), was created in 1938, as a part of the New Deal. In 2003, regulators discovered serious accounting problems that may cost Fannie Mae several billion dollars in losses. In 2003, the Office of Federal Housing Enterprises Oversight (OFHEO) investigated Fannie Mae and found a culture of corruption, arrogance, and pervasive accounting violations in the company. Executives at Fannie Mae cooked books to pocket an extra twenty-seven million dollars in bonuses. This paper presents the accounting improprieties at Fannie Mae and the consequences that followed its investigation.