Some housing bubble news from Washington. "Worried about the potential for inflation to get worse, Federal Reserve policy-makers at their May meeting considered raising a key interest rate by half a percentage point before opting for a quarter-point increase."

"(Economist) Douglas Porter said there were no major surprises in the notes given recent signs of economic strength and high oil prices. However, 'the overall impression the minutes leave is that there's a bit more concern about inflation that in previous minutes,' Porter said. 'I think it comes across loud and clear that these concerns are starting to weigh heavily on the Fed's members.'"

And on Fannie Mae. "Fannie Mae and Freddie Mac should retain records to allow regulators an on-demand look at the books of the two big mortgage companies, a federal agency said Wednesday. Rep. Richard Baker said he hopes that the Ofheo report will spur legislation tightening rules on the companies, which buy mortgages and free up lending capital at banks."

"'OFHEO's examination of Fannie Mae revealed breaches of propriety and judgment so deplorable in nature and pervasive in reach that it's almost as if we were barely scratching the surface,' Baker commented Wednesday."

From the USA Today. "In early 2004, Fannie Mae's then-CEO Franklin Raines came to USA TODAY to talk to editors and reporters. He was furious over an editorial that had run a few days earlier criticizing his company for, among other things, its 'questionable accounting practices.'"

"With barely a 'good morning,' Raines launched into a criticism of the editorial and a defense of his company."

"Last week, government officials said the company engaged in 'extensive financial fraud' by doctoring earnings so Raines and other executives could earn 'unjustified levels of compensation.'"

"These are extraordinarily damning assertions. They show a company whose top executives were contemptuous of criticism and imbued with a sense of entitlement to enrich. According to the report, Raines pulled in more than $90 million in his six years as CEO, $52 million of which was performance pay triggered by bogus accounting."

"Fannie Mae is no average company. It has a standing letter of credit from the U.S. Treasury. It is exempt from many of the reporting requirements of other public corporations. It can borrow money at lower interest rates than other companies can."

"It also creates special risks. The company, which pours money into the housing market by buying millions of mortgages from banks, is crucial to the functioning of the economy. For that reason, taxpayers would almost certainly be called on to bail it out if it ever got into serious financial trouble. That makes an honest accounting of its profits, assets and liabilities a vital public trust."

"That is not what the public got under Raines and his associates. The company overstated its earnings by $10.6 billion over six years. When people questioned the company's extraordinarily complex accounting, they were treated to angry rejoinders reminiscent of those delivered by Enron executives at their arrogant heights. When lawmakers or government officials argued that the company needed tighter oversight or fewer privileges, they were outgunned by Fannie's lobbying machine."

"The battle against corporate fraud did not end with the Enron verdicts last week. Federal agencies are still evaluating whether to bring civil or criminal charges against individuals. These are not pleasant things to contemplate. But they are the facts."