Reuters reports on Fannie Mae's portfolio. "Fannie Mae, the largest U.S. home funding company, on Monday said that its mortgage portfolio fell by an annualized 3.1 percent in January after expanding 21.4 percent in December. The retained mortgage holdings ended last month at $725.3 billion, as the portfolio resumed the shrinking pattern seen in every month last year except December."

"Congress continues to battle over the size of the combined $1.4 trillion portfolios of these two federally chartered companies, which buy mortgages from lenders and repackage them to sell as securities or keep for themselves. Last week a long-awaited investigatory report spearheaded by former Republican New Hampshire Sen. Warren Rudman found no major new accounting problems at Fannie Mae. Industry experts said the report nonetheless kept the focus on the company's activities."

USA Today takes a look at the bigger picture. "The internal report, commissioned by Fannie Mae and conducted by former senator Warren Rudman and the Huron Consulting Group, sketches a positive portrait of Fannie Mae's board, clearing them of direct responsibility for the company's accounting troubles."

"However, independent consultants contacted by USA TODAY say Fannie Mae directors were let off too easily by the report. In the post-Enron era, with stricter anti-fraud, governance and pay practices, the board should have been more aggressive in its watchdog role, they say. 'In today's world, it's very, very hard to comprehend that the board didn't know anything, that they felt misled,' said Frank Glassner."

"Greg Taxin, CEO of (a) corporate-governance research firm, contends the directors are guilty of 'tolerating a corporate culture and an organizational structure' that harmed investors. 'The first responsibility of a board is to protect shareholder capital,' Taxin wrote. 'This board, in my view, failed to do that adequately.'"

"There might have been conflicts and close ties among directors and corporate officers 'that blinded the board from what was going on,' said Charles Elson, head of the University of Delaware's Weinberg Center for Corporate Governance. 'The big question is: Was this a failure of internal controls, or a failure of the board itself?' Elson said. 'How did something this large escape their notice?'"

"Among other governance issues, the report questioned Fannie Mae's pay practices in recent years. The investigators found Fannie Mae set corporate earnings targets 'at achievable levels' it knew executives could reach. Once they hit those targets, they received higher salaries and bonuses from a bonus pool of millions of dollars."